Cons Magna to acquire coin-operated Internet access company
Consolidated Magna Ventures Ltd CMV
Shares issued 21,484,464 Jun 14 close $0.16
Tue 15 Jun 99 News Release
Mr. Robert Archer reports
The company has signed an option agreement to acquire CoyoteNet Inc., an
Internet access company.
CoyoteNet Inc. is a privately owned, Vancouver-based company in the
business of providing coin-operated Internet terminals in high-traffic
locations for public access to the Internet, principally for collecting
E-mail, checking stock quotes or surfing the Net.
Since September, 1998, CoyoteNet has installed 30 terminals in locations
throughout Canada on a revenue-share basis. Revenues currently average $800
per terminal or $24,000 per month and have been growing 50 per cent per
quarter since startup.
Personal communication is the fastest growing application on the Internet,
with United States E-mail traffic growing at 22 per cent per year and 84
per cent of users rating E-mail as their most indispensable Internet
application, according to the Electronic Messaging Association. Public
access Internet terminals generated $213-million (U.S.) in revenues last
year and are forecast to multiply in North America from a few hundred in
1999 to over 4,000 by 2001.
Like payphones, the key to the Internet business is not just the
technology, but cheap, easy access to the technology - CoyoteNet's
competitive advantage is in being able to tie up prime locations for its
Internet terminals so that travellers can send and receive E-mail and
access the Internet. Based on actual field trials, CoyoteNet has developed
a three-stage marketing strategy to become the predominant player in the
Internet terminal business in North America.
The company plans to pursue the transportation markets, including airports,
bus depots and train stations as well as conference centres, coffee shops,
college campuses, shopping malls, restaurant chains, hotel chains, gas
stations and convenience stores. CoyoteNet has also identified Internet
advertising through its terminals as a second and potentially very
significant revenue stream for years to come.
CoyoteNet has targeted 100 Internet terminals to be installed in 1999 and
forecasts at least 400 terminals by the end of 2000 and 1,600 terminals to
the end of 2001, potentially generating tens of millions of dollars in
annual revenues from access fees and advertising income based on current
returns.
The agreement allows Magna 45 days to complete its due diligence and
arrange a $500,000 financing for CoyoteNet in order to exercise its option
to acquire CoyoteNet. The CoyoteNet offering is 1.25 million shares at 40
cents each. Magna has agreed to pay an introduction fee on the closing of a
transaction with CoyoteNet.
Upon exercise of the option, Magna and CoyoteNet will enter into a merger
whereby Magna shareholders will receive 35 per cent and CoyoteNet
shareholders will receive 65 per cent of the new public listing, to be
called CoyoteNet Inc. As part of the listing process, Magna shareholders
will undergo a share consolidation on a ratio to be determined, and receive
a share dividend for Magna's mining assets. It is anticipated that the
share dividend will be in another new listing, to be called Magna Minerals
Inc.
"Should Magna elect to acquire CoyoteNet, the deal will add significant
value to Magna shareholders. We think CoyoteNet's management team and
corporate strategy make them an unusual entry to the public stock market -
an Internet company that actually makes money. As a bonus, Magna
shareholders will continue to own the existing mining assets in a separate
new company, Magna Minerals," stated Magna president, Robert Archer.
CoyoteNet founder and president, Glenn Ninow commented that, "Magna will
give our company the access to capital we require to fund our aggressive
growth strategy. We expect to install and operate several thousand revenue
producing Internet access terminals within the next three years in North
America alone. CoyoteNet plans to be the leader of the Internet access
business, which is just now starting to take off, Magna will be our vehicle
for growth."
Magna has agreed to a $225,000 brokered private placement financing,
consisting of 1.5 million units at 15 cents per unit, each unit to consist
of one common share and one-half of one common share purchase warrant
wherein one full warrant gives the unit holder the right to purchase one
additional common share at 15 cents for a one-year period. Company insiders
are subscribing for a portion of this offering. Canaccord Capital Corp. has
agreed to act as agent for the remainder of the offering and will receive
an 8 per cent commission and a 10 per cent brokers warrant on closing the
non-insiders portion.
Magna has also agreed to settle $300,000 in debts for stock in the company,
consisting of two million shares at 15 cents each. Companies related to
insiders of Magna constitute the majority of this shares for debt
settlement. The company has also issued a total of 419,700 bonus shares in
consideration of loans to the company.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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