Response to ASX Query re:Share Price
NEW TEL LIMITED 2000-01-06 ASX-SIGNAL-G HOMEX - Perth
RESPONSE TO ASX QUERY
Further to the Company's request dated 5 January 2000 for a trading
halt under Listing Rule 17.1, the Company wishes to provide the
following market update.
The Company announced to ASX on 31 December 1999, the Chairman's
address to the General Meeting of shareholders, which further
outlined the Company's program with regard to Internet sites in
China, and the ratification and approval by shareholders of a number
of share issues including the placement of 11 million shares in order
to provide working capital for the due diligence and assessment of
the proposed China Internet project. Full details of the proposed
China Internet project were released to the market in the market
announcement on 23 November 1999.
The Company's securities are also listed on the Nasdaq stock market
in the United States in the form of American Depository Receipts
(ADRs). The announcement made by the Company on 31 December was
released simultaneously to ASX and Nasdaq markets at opening of
trading on ASX on Tuesday 4 January 2000. Notwithstanding that the
majority of the Company's securities are presently traded on ASX, the
announcement received immediate extensive news wire service coverage
in the US resulting in increased investment in the ADR market. This
necessitated the purchase by the Company's ADR transfer agent of
additional shares from the Australian market to meet the US demand.
With respect to specific questions raised by ASX the Company responds
as follows:
Q1. We note that the Chairman's Address to the general meeting of
shareholders held on 31 December 1999 contains the following
statement.
"Through our association with key Chinese government businesses, we
will be uniquely positioned to access a market that is forecast to be
worth over $12 billion by 2002". Can the Company please explain the
basis on which this statement was made.
As previous announced to ASX on 23 November 1999, the Company has
entered into an acquisition agreement with Xinhua Holdings Limited
involving a group of key Chinese government businesses, New Tel took
a conservative approach to industry information from a report by Paul
Budde Communication Pty Ltd, a leading provider of telecommunications
industry statistics.
2. The Chairman's Address also states:
"Our CEO Mr Peter Malone has also recently returned from a series of
meetings and presentations in the US where he experienced first hand
the high level of interest and enthusiasm about our company's plans
in China. It is this level of enthusiasm that we believe is seeing a
re-rating of the Company's stock price."
(a) Can the Company please clarify what material was presented at
these meetings and presentations.
The meetings and presentations that are referred to were part of the
Company's 1999 investor relations programme, which covers both
Australian and US markets. These meetings typically involve a number
of interested investors, fund managers, brokers and analysts who
attend a formal presentation arranged by the Company and its US
investor management consultants.
The meetings and presentations took place between 11 and 13 December
1999. The format was the same slideshow presentation that was given
at the launch of New Tel's internet project in Sydney on 23 November
1999, a copy of which is also available on the Company's website
www.newtel-limited.com.
Standard investor packs were provided at these meetings and
presentations, which contain a New Tel 1999 Annual Report and current
Corporate Profile. In addition to this information, a copy of the ASX
and media release as provided to ASX on 23 November 1999, was also
included.
b) Can the Company clarify whether any information was presented in
the course of these meetings and presentations which has not been
released to the market generally.
The Company confirms that no additional information was presented in
the course of these meetings and presentations which has not been
released to the market generally.
(c) If no information other than information which has been publicly
released was presented during these private briefings, what
explanation can the Company offer for the sudden increase in buying
interest from US investors?
As advised in point 2 (a) above, the meetings and presentations held
in the US three and a half weeks ago were part of the Company's
investor relations programme, and were not private analyst briefings.
The Company suggests that the sudden increase in buying interest from
the US may have been a result of the EGM on 31 December 1999, and the
content of Chairman's address that was released to ASX and Nasdaq. At
the EGM, shareholders passed all resolutions relating to the
placement of shares to fund the assessment phase of the internet
project in China, thus confirming the Company would now be in a
position to finalise documentation required for acquisition of the
internet assets and placement of additional equity. The EGM
announcement received immediate extensive news wire service coverage
in the US.
(d) We request that the Company provide a copy of any materials used
in these private briefings.
The investor pack, ASX and media release, and the slideshow
presentation are in a form that cannot be easily faxed and therefore
have been delivered separately to ASX copies are available to the
market on request.
3. We refer to an article on page 53 of The West Australian today, 5
January 2000, concerning the Company (copy attached)
"In the US on Monday [3 January 2000] where New Tel is part of the
Nasdaq composite index, the stock nearly tripled in after-hours
trading thanks mostly to the Xinhua deal leading broadcaster CNN's
evening business report."
Can the Company please confirm whether such a news item concerning
the Company was broadcast as stated. Can the Company advise whether
information which had not been released to the market was available
to the media at the time stated.
The Company is unable to confirm the content of the news broadcasts
on CNN on 3 January 2000 as it has not been able to obtain copies of
transcripts for CNN news on that day. The Company did not provide CNN
with any information and has not provided any information to any
media that has not been already released to the market.
4. We refer to an article in The Daily Telegraph today, 5 January
2000 (copy attached). The article states:
"The leaps [in the Company's share price] here and abroad came after
Ray Dicks, a New York analyst credited with recommending 10 stocks
that have risen 10,000 per cent, endorsed New Tel on an American
financial news television channel.
In November, Mr Dicks, who works for Security Capital Trading, issued
a 'strong buy' recommendation on New Tel stock saying the Company had
the potential to be the dominant Internet Service Provider (ISP) in
the region.
"New Tel has the potential to become the America Online of Asia", Mr
Dicks said at the time, adding that New Tel could exceed $5 a share.
"Ray Dicks just made people aware that New Tel is as big as China.com
and Yahoo", two of the region's leading internet businesses, said
Robin Armstrong, the corporate head of stockbroker Findlay & Co.
Findlay & Co is working on research that will assert New Tel shares
"will easily go to $5".
Findlay's research project will be based on first-hand knowledge of
the China project. Last week, its managing director Ivor Findlay
joined New Tel's chief executive officer Peter Malone in a trip to
China and Hong Kong to assist with presentations to brokers. Mr Dicks
got his information from Mr Malone, too.
In early December, Mr Malone conducted a number of one-to-one
briefings with US analysts to explain what was happening in China.
Yesterday's share price surge did not surprise New Tel, said public
affairs manager Yvonne Polski, who added it was a 'response' to the
private analyst briefings".
We requested that Company's comment on this article, with particular
reference to the following matters:
(a) Can the Company confirm whether the Company's shares were
"endorsed" by Mr Dirks in the manner stated.
The Company has not been able to obtain copies of transcripts for any
American financial news television channel and therefore cannot
confirm that the Company's shares were "endorsed" by Mr Dirks in the
manner stated.
(b) Can the Company confirm whether Findlay & Co has prepared a
research report as stated; and whether the information on which that
research report has been released to the market.
The Company is aware that Findlay & Co is in the process of preparing
a research report on New Tel, however we understand that this report
has not been finalised or published. The Company has provided Findlay
& Co with information that has previously been released to the
market, including financial reports and ASX/media releases.
(c) Can the Company clarify what material was presented to brokers in
China and Hong Kong by Mr Malone and Mr Findlay; and whether any
information was presented in those briefings which has not been
released to the market.
The format for the meetings held in China and Hong Kong was the same
slideshow presentation that was given at the launch of New Tel's
internet project in Sydney on 23 November 1999, a copy of which is
also available on the Company's website www.newtel-limited.com.
Standard investor packs were provided at these meetings and
presentations, which contain a New Tel 1999 Annual Report and current
Corporate Profile. In addition to this information, a copy of the ASX
and media release as provided to ASX on 23 November 1999, was also
included.
The Company confirms that no information was presented in the course
of these meetings and presentations which has not been released to
the market generally.
(d) Can the Company clarify the comment of its public affairs manager
that yesterday's price increase was a 'response' to the private
analyst briefings.
In response to a question asked by the journalist regarding the
increase in share price and whether this related to meetings held by
CEO Mr Peter Malone in the US, Ms Polski-Furlan attributed the rise
to an understanding in the US and Australian markets of the
activities of the Company further to the investor relations
activities undertaken in the US in early December 1999, to the launch
of New Tel's internet strategy in Australia on 23 November 1999, and
the announcements to ASX and Nasdaq regarding the EGM held on 31
December 1999. The comment reported in the article was therefore
taken out of context of the overall discussion.
(e) Can the Company provide a copy of the materials used in these
private analyst briefings.
As with the meetings and presentations held in the US, the meetings
held in China and Hong Kong were part of the Company's investor
relations programme, and were not private analyst briefings.
The investor pack, ASX and media release, and the slideshow
presentation are in a form that cannot be easily faxed and therefore
have been delivered separately to ASX. Copies are available to the
market on request.
The Company is not aware of any new or additional information that it
is about to announce or is price sensitive that should be announced
to security holders or to the market. In addition to the above
responses, the Company confirms to the ASX that in all other respects
it is in compliance with the listing rules and in particular Listing
Rule 3.1.
C Piercy
COMPANY SECRETARY
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MORE TO FOLLOW
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Response to ASX Query re:Share Price
NEW TEL LIMITED 2000-01-06 ASX-SIGNAL-G HOMEX - Perth ASX QUERY
We refer to the recent discussions between New Tel Limited (the
"Company") and Australian Stock Exchange Limited ("ASX) on the
subject of the recent increase in the Company's share price. We refer
also to our letters dated 4 January 2000 and 5 January 2000, which we
have consolidated in this letter for the purpose of release to the
market.
Australian Stock Exchange Limited ("ASX") has noted a change in the
price of the Company's securities from $1.21 on 30 December 1999 to a
high of $2.31 on 4 January 2000.
We regard timely disclosure of relevant information as of prime
importance in the operation of an efficient market. Listing rule 3.1
is a particularly important listing rule. It is part of ASX's
continuous disclosure regime and is based on the following principle:
Timely disclosure must be made of information which may affect
security values or influence investment decisions, and information in
which security holders, investors and ASX have a legitimate interest.
In the absence of any information which explains the price change
referred to above, we wish to make the following enquiries;
1. Are any matters of importance concerning the Company about to be
announced to securityholders and/or the market? If so, can an
announcement be made immediately?
2. Is the Company aware of any information concerning it which, had
it been available to the market, might reasonably be regarded as an
explanation for recent trading in the securities of the Company?
3. Is the Company able to offer any other explanation for the price
change in the securities of the Company?
4. Can the Company confirm to ASX that it is in compliance with the
listing rules and, in particular, listing rule 3.1?
In addition to the above, ASX requests that the Company provide
responses to the following specific questions.
1. We note that the Chairman's Address to the general meeting of
shareholders held on 31 December 1999 Contains the following
statement.
"Through our association with key Chinese government businesses, we
will be uniquely positioned to access a market that is forecast to be
worth over $12 billion by 2002."
Can the Company please explain the basis on which this statement was
made.
2. The Chairman's Address also states:
"Our CEO Peter Malone has also recently returned from a series of
meetings and presentations in the US where he experienced first hand
the high level of interest and enthusiasm about our company's plans
in China, It is this level of enthusiasm that we believe is seeing a
re-rating of the Company's stock price."
* Can the Company please clarify what material was presented at these
meetings and presentations.
* Can the Company clarify whether any information was presented in the
course of these meetings and presentations which has not been
released to the market generally.
*If no information other than information which has been publicly
released was presented during these private briefings, what
explanation can the Company offer for the sudden increase in buying
interest from US investors?
We request that the Company provide a copy of any materials used in
these private briefings.
3. We refer to an article appearing on page 53 of The West Australian
today, 5 January 2000, concerning the Company (copy attached). The
article states;
"In the US on Monday [3 January 2000], where New Tel is part of the
Nasdaq composite index, the stock nearly tripled in after-hours
trading thanks mostly to the Xinhua deal leading broadcaster CNN's
evening business report."
Can the Company please confirm whether such a news item concerning
the Company was broadcast as stated. Can the Company advise whether
information which had not been released to the market was available
to the media at the time stated.
4. We refer to an article appearing in The Daily Telegraph today, 5
January 2000 (copy attached), The article states:
"The leaps [in the Company's share price] here and abroad came after
Ray Dirks, a New York analyst credited with recommending 10 stocks
that have risen 10,000 per cent, endorsed New Tel on an American
financial news television channel."
In November, Mr Dirks, who works for Security Capital Trading, issued
a 'strong buy' recommendation on New Tel stock, saying the company
had the potential to be the dominant Internet Service Provider (ISP)
in the region.
'New Tel has the potential to become the America Online of Asia', Mr
Dirks said at the time, adding that New Tel could exceed $5 a share.
'Ray Dirks just made people aware that New Tel is as big as China.com
and Yahoo)", two of the region's leading internet businesses, said
Robin Armstrong, the corporate head of stockbroker Findlay & Co,
Findlay & Co is working on research that will assert New Tel shares
'will easily go to $5'.
Findlay's research project will he based on first-hand knowledge of
the China project. Last week, its managing director Ivor Findlay
joined New Tel's chief executive Peter Malone on a trip to China and
Hong Kong to assist with presentations to brokers. Mr Dirks got his
information from Mr Malone, too. in early December, Mr Malone
conducted a number of one-on-one briefings with US analysts to
explain what was happening in China. Yesterday's share surge did not
surprise New Tel, said public affairs manager Yvonne Polski, who
added it was a 'response' to the private analyst briefings."
We request the Company's comment on this article, with particular
reference to the following matters:
* Can the Company confirm whether the Company's shares were
"endorsed" by Mr Dirks in the manner stated.
* Can the Company confirm whether Findlay & Co has prepared a
research report as stated; and whether the information on which that
research report has been released to the market.
* Can the Company clarify what material was presented to brokers in
China and Hong Kong by Mr Malone and Mr Findlay; and whether any
information was presented in those briefings which has not been
released to the market.
*Can the Company clarify the comment of its public affairs manager
that yesterday's price increase was a 'response' to the private
analyst briefings.
* Can the Company provide a copy of the materials used in these
private analyst briefings.
Please provide your responses to these questions, in a format
suitable for release to the market, to the undersigned on facsimile
9291 2020. We would appreciate your response on each of these matters
being as full and detailed as possible.
Should you have any queries on this letter, please do not hesitate to
contact the undersigned on 9224 0013.
John Moran
LISTINGS OFFICER |
