LIVE FROM LONG BEACH?courtesy of SinoKnowledge
REPRINTED FROM THE RAGING BULL BOARD
While there were 3 or 4 of the RB faithful that posted some much anticipated comments about the meeting, our buddy SinoKnowledge simultaneously updated the board while listening to Dr. Phan?s speech. Here?s a complete summary of his updates. Certainly a fine job of reporting.
ragingbull.com
Live, from LONG BEACH....
Here is my report. I will break it into multiple posts so you can read while I type the next point. First, there was no breaking news, so calm down and enjoy what the good Dr. had to tell us. Basically he answered maybe 8 to 10 questions that were the most frequently asked. He is a very interesting CEO, humorous and full of life. He knew he had to be careful and prefaced many statements with the "forward looking" disclaimer.
There were approx 250 folks there, I got to meet very few so far, but will head to the jazz club once I've finished here.
Pardon spelling errors as I'm not going to utilize spell check in the interest of speed.
Here we go...
ragingbull.com
First question was bout the TV set top boxes.
There are 18,000,000 cable subscribers in China, they pay only $3.00 per month vs $10 p/m for the internet. Legend is producing the boxes at a cost of about $60.00 each and a full retail of $300.00. MSFT got with Legend and had Windows CE installed. At first they wanted a fee for each unit, but when rebuffed they agreed to give it away. Sounds like Gates. UAC will be built in to each box, so the used just hits the marker and the Sinobill.com homepage will come up. NOT BAD!!!! They expect to sell 500,000 set tops this year. UAC is offering for new accounts over $3,000 a free unit, for $1,500 account they will sell it for 1/2 price. Dr Phan thinks they will end up giving away the boxes to any new subscriber at some point. This is cable access.
Microsoft is not the US Partner. That is still unannounced. More on that later.
ragingbull.com
Second question...status of Sinobull IPO
E&Y have committed to complete the business plan by 1/31. It is necessary for completion of the investment banking agreement. The units of Sinobull had revenues of 6.6 million last year and were profitable. All the Investment Bankers want to be involved in it!! The Chinese Banker locked Dr Phan in his office and did not want him to leave until he had signed a letter of agreement. He did not sign it. Usually to get an Investment banking firm involved it requires paying a fee to them for them to do their DD. This fee ranges from 500,000 to 1,000,000 for each firm. All the involved IB firms, including Merril, have waived their fees on Sinobull. They all want in!!
The IPO agreement should be completed by 2/15 if E&Y finish the plan on 1/31. It then will take 5 or 6 months until the IPO is placed. Look for August.
Dr Phan stated that the value of the IPO would be greater by approx 20% if it was gone on GEM. NASDAQ wants it also. The current thought is 70% NASDAQ and 30% GEM.
ragingbull.com
Third question...NASDAQ listing.
It is with the attorneys. Dr Phan asked them to do the S-3 so the $ can be released by Schwartz first. He expects NASDAQ paperwork to be completed by NEXT FRIDAY!!!
Now, this is interesting...NASDAQ has actually been calling him, asking when they are going to submit the paperwork. Dr Phan said he expects a quick turnaround with a listing in maybe 30 days after submission.
ragingbull.com
American partner...
Is tied up in legal paperwork currently. Dr Phan joked that Big American Companies move slower that the Chinese government. Most of the interested companies wanted to control Sinobull, taking 85%, instead of the 10% offered.
He said American partner announced in weeks. Two investment groups want to pay 5,000,000 each for 5% OF Sinobull.
ragingbull.com
The potential acquisition....
Dr Phan is VERY excited about this opportunity. It is currently owned by the PRC, has 3,000 employees and 30,000,000 US in revenue last year. They also lost 20,000,000 last year. The Deputy Minister wants to be free from having to ask for the funding from the government. Dr. Phan said, why don't you let us partner with you and do an IPO that will raise enough money to fund it for the next 20 years. A single piece of paper, letter of intent was signed allowing HRCT to purchase 25%of the company. This ISP has 600,000 subscribers currently. It has 80 portals from music to business to sports.
He hopes to complete the transaction in the next month or two.
He feels this transaction would be a BIG PUSH FORWARD for
HRCT. Making us better positioned than even China.com.
Forward looking disclaimer.
ragingbull.com
Innostar status...
Needs to complete their business plan which now will include eSat and a new JV agreement including them also. Hopes to have that completed by April with the IPO by the end of the year. He is trying to purchase a Chinese IP phone company with a national license that is now owned by the Army!!! This is a very lucrative business at present with large margins and net profits. He cited one company with a gross of 2,000,000 US and a net of 1,000,000 US.
My notes get skimpy as I was actually trying to eat the chicken at this time.
ragingbull.com
CEO and new Board Members.....
The new Board Members should be announced in the next two weeks. They have agreed to terms.
CEO is tough. He had one good candidate, offered him 2,000,000 signing bonus and a salary of 1,000,000 per year and was turned down. The search continues.
ragingbull.com
IPO shares for HRCT shareholders...
Sinobull plan is to float 5,000,000 shares at $20 each. HRCT would set aside 10% for HRCT shareholders or 500,000.
The cut off date will be determined by the Board and announced soon. Dr Phan quoted that will mean roughly that for every 20 shares of HRCT you will get an opportunity to buy 1 share of Sinobull. Someone needs to check the math, but it seems close to me, might be 1 for every 25.
ragingbull.com
Future value.... in one year
Now this needs every disclaimer that any lawyer ever thought about writing, but here it is.... Dr Phan expects Sinobull to be worth 3,000,000,000 to HRCT in one year. He expects Innostar to be worth 2,000,000,000 to HRCT in one year. He estimates 40,000,000 shares outstanding after using stock for purchases. So 5,000,000,000 divided by 40,000,000 gives a stock price of $125 not including anything else that will occur, and much will occur.
Not bad, think I'll hold mine.
One more post and then I'm outa here.
ragingbull.com
The last question....
Is HRCT for real, or is it a scam?
Ever seen that question, or asked yourself? Dr Phan said this...if this is a scam then the scam artists would be disappointed in me.
With BDO, E&Y and the others willing, and wanting to do business, not to mention the Investment Bankers who seem to be foaming at the mouth for Sinobull, what more is there for him to say? He relayed that the SEC has been very watchful of the News releases, have called and asked for the names of the E&Y folks in HK that are involved, etc. They have been on the job, I for one am happy to hear that is going on.
Last thought for now, and I'll post more tomorrow after I've really digested the info, right now I'm just typing from my notes and not really interpreting my thoughts, just trying to relay what I heard. And these posts are what I heard. Dr Phan is on a mission, he is respected in China because he does not pose a threat to them, or the government. He is not trying to force them to do anything, just allowing them access to capital without giving up political control. I found the limited information tonight to be amazing. I thought there were an awful lot of folks there, many more than I expected.
I did get to shake Dr Phan's hand, and by the way his name rhymes with fawn and not fan.
DDINVESTOR folks shared the table where I sat and did film the proceedings. There is much to think about and pardon me if I don't sit and answer questions now, I want to go find Dr Phan.... and my digital camera to....Shaky!! LOL
Good night board.
?bandit
of ddinvestor.com
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