A: YES, WE ARE HOLDING A CIBT DIRECTOR'S MEETING IN 3 WEEKS TO APPROVE THE RESOLUTION OF A REVERSE MERGER SO THAT CIBT CAN BECOME TRADING ON THE US OTC-BB. THE TARGET COMPANY IS BACKED BY DIRECTORS COMING FROM THE EDUCATION BACKGROUND, TO BE PRECISE, A PROFESSOR IN CLINICAL PYCHIATRY. WE FEEL VERY STRONG SYNERGY AMONGST THE PARTIES.
This is amazing news and should add significantly value to the shares of CPT. So now we have two new listings to look forward to in the near future.
You asked about reverse mergers and what is the normal protocol. A reverse merger is an efficient and inexpensive way to bring a new company onto an exchange. I called CPT's IR person after I read your post and it appears that they are planning on doing their reverse merger with a shell company. As a point of clarification, a shell company generally has little or no cash, they don't have an active business, and their primary attraction is that they do have trading shares, a name, and most importantly a listing. So right now there is a shell company listed on the OTC BB that after the reverse merger will become CIBT. Often as a result of a past rollback, the shell company normally only has a small number of outstanding shares. In order for the reverse merger to take place, the OTC BB company will issue CPT a given number of shares (e.g. 5-10 million shares). CPT will then have ownership of the OTC BB company through ownership of these shares. After the reverse merger, the OTC BB company will change its name to CIBT (or possibly a new name) , and bring on a new board of directors.
I am not experienced a reverse mergers, but I assume that CPT stockholders would be distributed some pro rata number of shares in the new company? Is this true?
To answer your questions, shareholders of CPT will not receive shares of this new company directly but will hold them indirectly through their CPT holding.
So why will this listing likely add significant value to CPT?
The most obvious one is supply and demand. The audience for CIBT will likely go up by a factor of 10 or more when they list in the U.S since the large majority of U.S institutions and retail investors do not watch or invest in CDNX listed stocks. With a larger audience following the stock after the U.S listing and a tight share structure because of the new shell, CIBT will have far more demand and less supply which should result in a significantly higher valuation for CIBT - simple economics <ggg>.
By spinning off CIBT into a separate company, the current fundamentals and potential for CIBT should be better realized.
A good example on how investor will normally value the subsidiary at a significantly greater value once it is split off from the parent company is the 3COM/PALM spin-off on March 2, 2000. Two weeks before 3COM spun off their PALM INC subsidiary into a separate company investors were willing to give 3COM and PALM combined a market capitalization of only $25 Billion. However when PALM began trading as its own company on March 2nd investors couldn?t get enough of PALM and valued the company as high as $93 Billion on the first day of trading. The price of 3COM went up 70% in the week leading up to the PALM spinning off. There were no major fundamental changes in either company and yet investors were willing to value both the parent and the new company at far higher prices after the spin-off.
(Note: I don't think investors will value CIBT at $93 Billion but did think it was a good example <gg>)
It is very unlikely that CPT would spin-off CIBT onto a new exchange without putting out some positive news on CIBT. Mr. Chu hinted at great things to come in his above response when he mentioned partners and synergy. In the December 31, 1999 BC form 61 on Sedar the company states:
Recognizing the power and possibilities of the Internet, CIBT is now developing a series of online business education programs in order to benefit students by enabling them to enhance their qualifications at the lowest possible cost
sedar.com
I would guess we see some major developments in the online program when CIBT starts trading in the U.S which can only increase the value of CIBT. When I visited CPT in Vancouver I was informed that there was a recent ruling in China on which companies/schools can provide online education programs in China. I don't have the exact numbers but the ruling stated that any companies/schools offering credited online education had to have had physical schools in China for X number of years and also have X number of years of experience along with a bunch of credential. The goods news is that CIBT fits all of these regulations. The bad news for almost every other online education units in the US, etc. is that none of them do. CIBT will be the only online MBA education program in a country of 1.2 billion. In addition, The China Education and Research Network (CERNET - edu.cn, funded by the Chinese government, has been establishing a nation-wide education and research network infrastructure to support education in and among universities, institutes and schools in China using the up-to-date telecommunication and computer techniques.
Best Regards
KEITH |
