Jaguar Acquisition Corporation Announces Agreement and Plan of Merger With China Cablecom Ltd.
Wednesday October 31, 8:58 am ET
-- Jaguar to Enter the Rapidly Growing Cable TV Sector in China
-- China Cablecom Is an Emerging Consolidator of Cable TV Operating Companies in China
-- Binzhou Broadcasting Is the First Acquisition in a Consolidation Effort by China Cablecom in the Shandong Province
CONSHOHOCKEN, PA--(MARKET WIRE)--Oct 31, 2007 -- Jaguar Acquisition Corporation (OTC BB:JGAC.OB - News), a special purpose acquisition company ("Jaguar"), today announced that it has signed an agreement and plan of merger to acquire all of the issued and outstanding shares of China Cablecom Ltd., a British Virgin Islands company, ("China Cablecom"), an emerging consolidated cable network operator and acquirer in the highly-populated Shandong province in the People's Republic of China (PRC). As part of the transaction, Jaguar will redomesticate to the British Virgin Islands by means of merging with a wholly-owned subsidiary immediately prior to consummating its transaction with China Cablecom.
China Cablecom is entitled to a 60% economic interest of Binzhou Broadcast and Television Information Network Co., Ltd. ("Binzhou Broadcasting"), an operating cable TV joint venture with a local state-owned enterprise ("SOE") owned by Binzhou branches of SARFT, China's State Administration of Radio Film and Television. China Cablecom consolidates 60 percent of the financial results of operations and cash flows of Binzhou Broadcasting pursuant to applicable principles of US Generally Accepted Accounting Principles. Located in the Shandong province in northeast China, Binzhou Broadcasting has 258 employees and serves 442,900 paying subscribers in an area with a population of over 3.7 million people.
In 2006, the businesses acquired by Binzhou Broadcasting generated approximately $8.3 million in revenues. Based on China Cablecom's 60 percent consolidation of Binzhou Broadcasting, this would have resulted in $3.3 million in EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) and $1.7 million in net income being reflected in China Cablecom's financial statements for those periods had the acquisition of Binzhou Broadcasting by China Cablecom taken place on January 1, 2006. Currently, Binzhou Broadcasting's average revenue per user (ARPU), a key metric used in the cable industry to measure operating and financial performance, is approximately $1.50 per month. Subscriber growth has averaged approximately 10 percent annually. Binzhou's balance sheet at December 31, 2006 reported $20.9 million in property, plant and equipment, net of depreciation, and $11.3 million in shareholders' equity. For 2007, Binzhou Broadcasting projects revenues growth of approximately 10 percent.
In addition to its acquisition of Binzhou Broadcasting in September 2007, China Cablecom is in active discussions with cable TV companies in other municipalities in Shandong province with a goal of adding an additional 150,000 to 200,000 subscribers. According to analysis by Skillnet, Shandong is the second most populous province in China with 92 million people, one of the largest broadcasting markets in China, and is number two in terms of Gross Domestic Product (GDP). According to the China Statistic Bureau, SARFT 2007, there are a total of 32.1 million television households in Shandong with 26 million homes passed by cable. Currently, 17 municipal cable and 100 county-level cable operators provide cable TV services to over 10 million cable TV households, the majority of which are still analog, according to Skillnet. Government directives mandate the conversion of the entire country to digital cable TV by 2015, which allows cable TV operators to drive significant revenue growth and enhance margins by selling higher priced value-added services and content. According to the digitalization plan announced by SARFT, by 2009, 40 percent of the approximately 11.5 million cable households in the Shandong province are expected to convert to digital, an increase from approximately 7.1 percent currently, while ARPUs are expected to reach approximately $3.50 per month, representing a 133 percent increase from current levels associated with analog service.
Jonathan Kalman, Chairman and Chief Executive Officer of Jaguar Acquisition Corporation, stated, "This transaction is the first of its kind for a U.S. public company and will provide a platform for China Cablecom to pursue its goal of becoming a leading cable TV operation consolidator in China. Clive Ng, the founder, Executive Chairman and President of China Cablecom, is one of the most experienced Asia-focused media sector executives in the world. In addition to his prior experience with numerous public entities, Clive brings significant relationships in the media and cable TV industry that will prove invaluable as China's cable TV market transitions from analog to digital. Clive is a proven leader with the vision and capability to execute China Cablecom's long-term growth plan."
In contemplation of its merger with Jaguar, China Cablecom recently completed a debt and equity bridge financing in which it received gross proceeds of $20 million from institutional and accredited investors, which was managed by Chardan Capital Markets, LLC. The proceeds will be used to complete the joint venture arrangements with Binzhou Broadcasting, as well as used for working capital purposes.
"I am very pleased to be working with Jaguar and Chardan Capital Markets on this ground-breaking transaction," commented Clive Ng, founder, Executive Chairman and President of China Cablecom. "We are leveraging proven Western-bred strategies, efficiencies and capital to help expand and grow these already impressive Chinese cable TV operations. We expect 2008 to be an inflection point of accelerating growth for China Cablecom as we begin our major digitalization and business development initiatives.
"Following our merger with Jaguar, China Cablecom will boast an experienced management team and world-class board of directors combining expertise in developing and managing major international digital media properties. We intend to leverage our veteran team to make prudent investments in operation partnership with municipal cable operators, like Binzhou, while penetrating rural communities and preparing for the future deployment of digital and other value-added services, such as broadband and Video-on-Demand to drive incremental revenue and EBITDA growth. China Cablecom will create shareholder value through a focused strategy of deploying its financial and managerial resources to optimize the operations and efficiency of the cable properties we own and manage with the overall goal of building a leading cable company in the PRC."
Terms of the transaction include the issuance of 1.3 million shares of Jaguar common stock to Clive Ng, 766,680 shares to the bridge holders and the assumption of the $20 million bridge debt. In connection with the transaction to acquire China Cablecom, certain China Cablecom and Jaguar shareholders, directors and affiliates are granted, on an all or none basis, the following performance incentive shares if the following EBITDA targets are reached:
Year ending EBITDA Shares
2008 $11,000,000 3,120,000
2009 $20,000,000 3,000,000
2010 $30,000,000 1,000,000
2011 $40,000,000 1,000,000
There remain several conditions to Jaguar's completing the acquisition of China Cablecom, including approval by the SEC of Jaguar's forthcoming proxy, approval by Jaguar's shareholders of the merger between Jaguar and China Cablecom and customary conditions regarding the accuracy of representations and warranties and deliveries to be made.
Founder, Executive Chairman and President of China Cablecom
Mr. Clive Ng is a Media Sector financier and executive who was instrumental in establishing joint venture partnerships among several major media conglomerates, including United Artists Theatres and Television Broadcasts (TVB) of Hong Kong. In addition, Mr. Ng helped facilitate the U.S. cable company, United International Holdings Inc. (renamed Liberty Global), entrance into the Asian market with his family taking a 20 percent stake in the venture. He was also CEO of Pacific Media PLC (listed on the LSE), a home shopping company which purchased TV Media from H&Q Asia Pacific, ultimately creating a company with a $450 million market capitalization. In addition, he was the Chairman and founder of Asiacontent, one of the first Asian companies to list in the U.S., a founding shareholder of MTV Japan, founder of E*Trade Asia, and co-founder of TVB Superchannel Europe, the leading Chinese broadcaster.
Board of Directors
Key members of the board of directors of Cablecom, in addition to Mr. Ng, assuming a business combination is consummated, will include the following:
-- Mr. Simon Bax has extensive financial and operating experience in the
media and entertainment industry. Mr. Bax is currently the vice-chairman of
Docufide, Inc., serves as an independent director of Panmure Gordon & Co.,
MobiTV Inc., ROO Group, Inc., and is a Principal of BDT Acquisitions LLC.
He served as Chief Financial Officer of Pixar Animation Studios from May
2004 through the completion of the sale to Disney for $7.4 billion in June
2006. He had the specific responsibility for finance, administration and
investor relations and oversaw marketing, distribution and consumer
products while reporting directly to Steve Jobs. In the mid 1990s Simon
served as the CFO for Twentieth Century Fox and was promoted to CFO of Fox
Film Entertainment and President of Studio Operations. In addition, he is a
member of the Academy of Motion Picture Arts and Sciences, the British
Academy of Film and Television Arts, and a Trustee of The UC Berkeley Art
Museum and Pacific Film Archive.
-- Dr. Shan Li, who is the former CEO of Bank of China International
Holdings, former managing director and head of China investment banking at
Lehman Brothers, is the deputy head of the National Center of Economic
Research and a member of the board of alumni at Tsinghua University in
Beijing. He is a regular commentator and author on various influential
local and international mass media and publications on topics concerning
China's economic development policy. Additionally, Mr. Li holds a Ph.D. in
economics from MIT.
-- Mr. Alejandro ("Alex") Zubillaga is currently Executive Vice
President, Digital Strategy and Business Development for Warner Music Group
(WMG) and is responsible for the company's worldwide digital music strategy
and business development activity including its strategic initiatives in
wireless, e-commerce, Internet, electronic music distribution and new music
formats. Prior, he served as founder, chairman and CEO of NETUNO, a leading
provider of broadband communication services in Venezuela.
-- Mr. Kerry Propper is CEO of Chardan Capital Markets, LLC, a New York
and Beijing based investment bank. Mr. Propper is also CEO of Chardan
South China Acquisition Corporation and Chief Financial Officer of Chardan
North China Acquisition Corporation, publicly traded special purpose
vehicles (SPV) charged with effectuating a business combination with a
mainland Chinese growth company. Mr. Propper sits on the board of directors
of the US Pakistan Business Council and Origin Agritech, Ltd. and is on the
board of advisors of Netsol Technologies among other companies.
-- Mr. Jonathan Kalman, Chairman and CEO of Jaguar Acquisition
Corporation, will serve on the board. Mr. Kalman is Managing Partner of
Jaguar Capital Partners, and has served as Chairman of Katalyst LLC, a
media, communications and technology investment banking firm, since
September 1999. Earlier he was managing director of Naviant Technology
Solutions, a consumer profile and e-marketing company acquired by Equifax
Inc.
Loeb & Loeb LLP, BDO Seidman LLP and Orrick, Herrington & Sutcliffe, LLP were advisors to Jaguar in this transaction.
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