Alyst Acquisition Corp. (stock symbol: [t]AYA[/t]), which raised $64.4 million when it went public in July 2007, has announced that it has signed an agreement to merger with China Networks Media, "which owns and is in the process of acquiring television station operating assets in the People's Republic of China."
Alyst Acquisition Corp. Announces Agreement and Plan of Merger With China Networks Media, Ltd.
Monday August 18, 9:31 am ET
NEW YORK, Aug. 18 /PRNewswire-FirstCall/ -- Alyst Acquisition Corp. (Amex: AYA - News), a special purpose acquisition company ("Alyst"), today announced that it has signed an agreement and plan of merger to acquire all of the issued and outstanding shares of China Networks Media Ltd., a British Virgin Islands company ("China Networks"), which owns and is in the process of acquiring television station operating assets in the People's Republic of China (PRC). As part of the transaction, Alyst will redomesticate to the British Virgin Islands by means of merging with its wholly-owned subsidiary China Networks Holdings immediately prior to consummating its transaction with China Networks. Chardan Capital Markets, LLC ("Chardan") is acting as exclusive advisor to the transaction.
China Networks, through its wholly owned subsidiary, Advertising Networks Limited and through certain contractual arrangements entered into under PRC law, has positioned itself as a fast growing television advertising network in the PRC. In partnership with municipal and provincial stations, China Networks provides local, national and international advertisers with direct access to China's rising audience of consumers. Through long-term contracts, China Networks operates as the exclusive advertising arm for stations within its network -- providing both general and targeted packages for advertisers across an expanded viewer base.
China Networks was established in October 2007 and has completed the consolidation of two television advertising companies to date with additional negotiations in progress with other PRC stations. Combined audited carve-out revenue for Kunming Taishi Information Cartoon Co., Ltd ("Kunming") and Shanxi Yellow River and Advertising Networks Cartoon Technology Co., Ltd ("Yellow River") for the year ending 2007 was approximately $21.0 million, with net income of approximately $14.7 million. China Networks' consolidation of each yields revenue of approximately $21.0 million and net income of approximately $7.4 million. As a combined entity, China Networks' pro forma two-year CAGR was 15%.
Michael E. Weksel, Chief Operating Officer of Alyst stated, "The proposed merger between Alyst and China Networks presents a unique opportunity to participate in the rapid growth of the Chinese media space. We believe the transaction creates real value for the shareholders of Alyst and provides China Networks with the capital and capital markets access it needs to realize its potential."
Li Shuangqing, Co-Chairman and Chief Executive Officer of China Networks stated, "Having been a TV station Director of Advertising and operated an internet and television advertising brokerage for nearly a decade, I and my partners are all too familiar with the challenges inherent in the short-term contracts and yearly re-negotiations that are standard across the PRC television advertising industry. China Networks has resolved those fundamental issues by aligning the stations' interests with those of the ad carriers and the advertisers themselves. Our long-term contracts effectively lock-in and align our interests with the TV stations for both of our benefits." Of the merger, he continued, "Our merger with Alyst, as arranged by Chardan, allows us to increase the pace of our expansion, accelerate efficiency improvements, raise our industry visibility and bring significant value to our current and future partners and our shareholders in the process."
Pursuant to the transaction, China Networks will become a wholly-owned subsidiary of Alyst and the holders of the capital stock of China Networks will receive, upon the effectiveness of the merger, an aggregate of (i) 2,880,000 ordinary shares and (ii) $17,000,000 in cash. The holders of ordinary shares of China Networks will also be entitled to receive up to $6,000,000 of additional cash and up to 9,000,000 additional ordinary shares upon attaining certain performance milestones, as shown in the following chart:
Year Ending 12/31 Net Income Shares Net Income Cash
2009 $20,000,000 2,850,000 $15,000,000 $3,000,000
2010 $30,000,000 3,075,000 $25,000,000 $3,000,000
2011 $40,000,000 3,075,000 --
Additionally, the holders of the capital stock of China Networks will be entitled to receive up to $24.9 million of the cash received by Alyst from the exercise of outstanding Alyst warrants. There remain a number of conditions to Alyst's completing the acquisition of China Networks, including review by the U.S. Securities and Exchange Commission (the "SEC") of Alyst's forthcoming proxy and the related registration statement and approval by Alyst's shareholders of the merger between Alyst and China Networks.
About China Networks
China Networks is a television advertising company formed in 2007 for the purpose of investing in, consolidating, expanding and streamlining PRC television advertising assets in partnership with municipal and provincial level TV stations.
The current board of directors of China Networks is comprised of Li Shuangqing, Co-Chairman of the board and CEO, Sean Hinton, Co-Chairman of the board and Principal at Terbish partners, an investment banking and strategic advisor specializing in the media sector in London and Beijing and former Managing Director of Ealing Studios, one of the United Kingdom's oldest and most respected TV and film studios, and Kerry Propper, CEO of Chardan Capital Markets, and board member of A-Power Energy Generation Systems, Ltd., China Cablecom Holdings Ltd., HLS Systems International, Ltd. and Origin Agritech Limited.
In June 2008, China Networks raised $28 million in a private placement for the consolidation and operation of the advertising operations of two television stations: Kunming and Yellow River. Chardan served as exclusive advisor and placement agent for the transaction.
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