NWL - Sydney Morning Herald - Deal is finalised
SMH 9th Oct 2000
- BIZ.COM
New Tel after $200m to fund its China play
By KATRINA NICHOLAS
Perth telecommunications group New Tel is expected to finalise its long-awaited $200 million share placement in the next few weeks, facilitating its move into the Chinese Internet market.
New Tel is understood to have appointed stockbroker Nomura as lead underwriter of the raising and has received undertakings from domestic and US institutions for most of the stock.
Sources close to the company said that although no price had been finalised, the placement was likely to be done in the vicinity of $3 a share, with US institutions expected to subscribe for at least half of the issue.
It is expected New Tel will call a shareholder meeting later this month to ratify the placement and receive final details of New Tel's plans for its association with China's State-owned Xinhua news agency, which is selling an Internet service provider to New Tel and providing content.
Shareholders will also be provided with a copy of an independent expert's report on the deal, being prepared by Ernst & Young in Perth.
New Tel said last November it would enter the Chinese market by acquiring at least two Chinese ISPs and up to 30 Web portals.
New Tel, which has attracted high profile investors such as Mr Rodney Adler, Mr Yosse Goldberg and Sir Laurence Street, said it would form a new company in China by buying the assets of Xinhua for $400 million.
In return, Xinhua, which already has a 5 per cent stake in New Tel, would increase its stake to between 45 and 49 per cent.
The $200 million will be for working capital and marketing.
Further indicating an announcement is close was the release last week of details of New Tel chief executive Mr Peter Malone's revised option package.
Under the deal - a reward for his efforts in "securing and delivering the China Internet project" - Mr Malone will be issued 95 million options entitling him to a 20 per cent stake.
The first instalment will see Mr Malone receive 47.5 million options, each with an exercise price of $2. The remaining 47.5 million options will be delivered in four tranches of 11.875 million each, with progressive strike rates of $2.25, $2.50, $2.75 and $3 per option.
But before Mr Malone can cash in on the first 47.5 million options, which have no escrow period and lapse on October 30 2004, he must first stitch up the deal with Xinhua and complete a minimum capital raising of $125 million via the placement of up to 62.5 million shares at not less than $2 a share. With shares in New Tel on Friday slipping 5c to $1.60, Mr Malone's options are out of the money.