HitCom Corp. Acquires Channel Telecom Inc.
Acquisition Positions the Company for International Expansion
ST. LOUIS--(BUSINESS WIRE)--Feb. 19, 1998--HitCom Corp. (OTC: HICO - news), a facility-based telecommunications company with headquarters in St. Louis, Thursday announced the signing of a definitive agreement to acquire 100% of the outstanding shares of Channel Telecom Inc., which has headquarters in Toronto.
Channel is the fourth largest facility-based provider of prepaid calling cards in Canada. The transaction has been approved by HitCom's board of directors and is expected to be ratified at HitCom's upcoming annual meeting of shareholders.
Under the terms of the agreement, HitCom will exchange approximately 3.8 million shares of HitCom common stock (subject to final adjustments) and $175,000 in cash for all of Channel's outstanding shares. Currently, Channel Telecom's sales would represent about 30% of HitCom's 1997 revenues. The effective date of the transaction will be Jan. 1, 1998.
The Channel acquisition advances HitCom's three-year growth strategy to become a world leader in developing and provisioning enhanced communications services.
The acquisition is also consistent with HitCom's overall corporate objective to expand, in part, through strategic acquisitions which increase HitCom's market share, enhance its product mix, increase revenues and augment the company's current management team and capabilities.
''HitCom is aggressively expanding its business by focusing on enhanced communications services and technologies. This acquisition strengthens our corporate infrastructure and ability to successfully compete in the evolving international telecommunications marketplace,'' said Scott Beil, chairman, HitCom.
''We are acting on an unprecedented opportunity in the worldwide telecommunications industry,'' said Rajan Arora, president, Channel Telecom. ''International deregulation and advancing technology in the telecommunications industry are creating market niches that were inconceivable just a few years ago.
''HitCom intends to aggressively pursue those market niches by deploying its proprietary communications technology and facility-based network to offer a variety of enhanced communications services throughout the world.''
HitCom's acquisition of Channel will allow the companies to integrate their facilities, creating an upgraded call switching network that allows the company to offer new services in both the United States and Canada. Management also expects the upgraded network to decrease current operating costs associated with HitCom's existing Canadian call volume.
The company is also considering other strategic acquisitions that would continue to increase annual revenues, earnings and shareholder value. HitCom plans to release 1997 results in early March. Included within the results will be pro forma results reflecting the Channel acquisition.
About Channel
Channel Telecom, based in Toronto, has experienced significant growth over the past 4 years, and is now Canada's fourth largest facility-based provider of prepaid calling cards. The company's branded cards, Channel PhonePass(tm) and PhoneCash(tm), are distributed through a broad retail distribution base in Canada.
Channel's subsidiary, Channel Telecom USA, is implementing a plan to build a similar retail distribution base in the United States.
About HitCom
HitCom, based in St. Louis, is a facility-based telecommunications company that provides enhanced communications services and technology to businesses and consumers in the United States and Canada.
Specifically, HitCom focuses on designing, developing and marketing interactive voice response/voice processing services, prepaid phonecards and phonecard platform services, internet connectivity services, IP telephony services and other emerging communications services.
HitCom is traded on the OTC Bulletin Board under the symbol HICO. HitCom can be found on the World Wide Web at hitcom.com.
Statements contained in this news release regarding expected financial results and other planned events are forward looking statements, subject to uncertainties and risks, including, but not limited to, the demand for HitCom's products and services, and the ability of the company to successfully implement its strategies, each of which may be impacted, among other things, by economic, competitive, or regulatory conditions.
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Contact:
HitCom Corp., St. Louis
Anthony W. Hitt, 314/621-9100 or 800/705-4004
ahitt@hitcom.com |
