Metromedia International Group's Ningbo Ya Mei Joint Venture Receives Notice of Project Status
NEW YORK--(BUSINESS WIRE)--Aug. 4, 1999--Metromedia
International Group, Inc. (AMEX:MMG) today announced that it had
received notification from China Unicom stating that a department of
the Chinese government had requested termination of one of its four
joint telecommunications projects. The notification letter from China
Unicom requested that negotiations begin immediately regarding the
amounts to be paid to Metromedia International's joint venture,
including return of investment made and appropriate compensation and
other matters related to the winding up of the joint venture's
activities as a result of this notice. Representatives of Metromedia
International have commenced negotiations with representatives of
China Unicom on the amount of the compensation and terms of the
resolution of all issues between the parties and as a result,
Metromedia International cannot currently determine the amount of
compensation its joint venture will receive.
While the notification letter involved only the Company's joint
venture in the Ningbo City, Metromedia International expects that the
other three telecommunications projects in which it has invested will
receive similar letters. The Company's Ningbo City project, Ningbo Ya
Mei Telecommunications, Ltd., provides equipment, financing and
technical services to China Unicom in support of its GSM cellular
operations in Ningbo City, China.
Stuart Subotnick, Metromedia International Group's President and
Chief Executive Officer stated, "We have been saying for some time
that the Chinese government has been examining the manner in which
foreign investors have structured their investments with China Unicom.
With the notification from the Chinese government on the Ningbo City
project, we expect that our other three telecommunications projects
will be wound up in due course. We understand that other companies
with foreign investors involved in telecommunications projects with
China Unicom are receiving similar notification from China Unicom. We
are still evaluating other investment opportunities in communications
and electronic commerce in China. As you know, we recently announced a
new China joint venture to develop and operate an e-commerce system."
Discussion of the terms of the conclusion of the joint venture
have just commenced. The Company cannot yet predict the effect of the
Ningbo Ya Mei negotiations and the expected winding up of the
Company's other three telephony-related joint ventures. Negotiations,
if adversely concluded, could have a materially negative effect on the
Company's financial position and operating results. Depending on the
amount of compensation, the Company may have to record a non-cash
charge that will reduce the carrying value of the goodwill associated
with its telecommunications joint ventures in China. The goodwill
balance at June 30, 1999 was approximately $63 million. |
