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.
