dcsimg
RealTime IT News

New Tel Solidifies China Net Plan, Issues New Shares

New Tel Ltd. stock hit new highs Tuesday after Chairman Harry Sorensen explained the company's China strategy in detail to its shareholders.

In November, New Tel (NWLL) announced plans to launch a portal and ISP service in China in conjunction with the government's news agency, Xinhua, in a joint venture deal valued at $400 million.

The company sparked new interest with the recently expanded list of government-owned enterprises to participate in the Internet venture, as well as the approval of new share issues. New Tel expects to raise $22 million through the sale of new stock shares.

The Australian telco said that portal content will be supplied by 18 Chinese government ministry Web sites, and that New Tel will have a stake in each site with an interest ranging between 35 and 50 percent.

New Tel shares on the Nasdaq soared more than 300 percent, climbing 28-15/32 to 36-11/16 in mid-morning trading.

"Through agreements signed with Xinhua Holdings Ltd., New Tel will establish a Chinese Internet service provider and a Chinese/English language portal," Mr. Sorensen added. "Through our association with key Chinese government businesses, we will be uniquely positioned to access a market that is forecast to be worth over US$12 billion by 2002."

Shareholders approved the sale of 3 million options, the issue of 11 million additional shares, and approved the transfer of stock to Xinhua as part of the original deal. Under the original terms of the agreement, Xinhua created a new subsidiary, Newco, which was subsequently purchased by New Tel. Xinhua will now hold a 25 percent stake in New Tel in exchange for 3 million shares.

New Tel launched its services in July of last year, and has since listed on the Australian Stock Exchange and the Nasdaq.