Folks, This could be a BIG CONNECTION! Here is more:
OzEmail Limited Reorganises Internet
Telephony Subsidiary to Expand Presence in
Voice-over-IP Market
Reacquires 40% stake in Interline from Metro Holding AG.
Announces Hyundai joins as Korean Interline affiliate.
Company moves headquarters to Silicon Valley to be closer to
heart of
Internet Telephony development.
Sydney, Australia, April 16, 1998 - OzEmail Limited (Nasdaq:
OZEMY), one
of the leaders in the growing Internet telephony industry and the
leading provider of comprehensive Internet services in Australasia, has
taken steps to strengthen the market presence of its Internet telephony
subsidiary - OzEmail Interline.
OzEmail announced today that it is exchanging approximately 5,400,000
OzEmail Ordinary Shares for Metro Holding AG's 40% interest in
Interline, increasing OzEmail's ownership position in Interline to 88%.
The stock consideration is equivalent to 540,000 OzEmail Limited
American Depositary Shares (which would have had a value of
approximately US$12 million at the close of market on April 15, 1998),
representing approximately 4.5% of the expanded share equity of
OzEmail. OzEmail and Metro have agreed to work together to promote
the
Interline Internet telephony products and services.
"Our new arrangement with Metro will enable us to direct our European
affiliate development efforts. The arrangements also provide for the
distribution of Interline products. We have been testing prepaid phone
cards in Australia, and Metro, as one of the biggest retailers in
Europe, is the ideal partner to distribute these cards throughout
Europe," said OzEmail Chief Executive Officer Mr Sean Howard in
announcing the agreement.
OzEmail originally held an 80% equity interest in Interline. In June,
1997 Metro purchased a 40% equity stake in OzEmail Interline 32% of
which came from OzEmail with the remaining 8% from Ideata Pty
Limited,
OzEmail's original partner in the venture. As a consequence of the
acquisition of the Metro stake, OzEmail's interest in OzEmail Interline
is now 88%. Metro was also granted an exclusive licence to roll out the
Internet telephony offering in Europe. OzEmail's interest in the total
cash consideration for the grant of the licence and the sale of the
equity was US$12 million. Theexclusive licence has been terminated as
part of the current transaction.
As a consequence of the stock-based repurchase of OzEmail's 32%
interest
within 12 months of the selldown on 26 June, 1997 to Metro, and in order
to comply with SEC revenue recognition requirements, OzEmail is
required
to restate its second and third quarterly filings as well as to restate
its results within the 10-K.
This has the effect of reversing the one-off transactions associated
with the Metro arrangements in the second quarter filing of 1997. Due
to the capital nature of the restructuring the transactions have been
reversed gross of tax. As a result of these non-cash adjustments the
previously reported unaudited net income for the year to 31 December
1997 of AUS$2,988,000 has been restated to a preliminary unaudited
net
loss of AUS$14,238,000. The unaudited loss per American Depositary
Share is A$1.31 (US$0.85) for the year ended December 31, 1997.
Given
the complexity of this restatement, the 10-K and the restated 10-Q are
not expected to be lodged with the SEC before the end of April.
"We have been very successful lining up Interline affiliates throughout
the Pacific Rim, including Mitsubishi Dream Train Internet in Japan and
MagicTel in Hong Kong said Mr Howard. "Today I am pleased to
announce
that Hyundai Information Technology ("HIT"), one of the Hyundai group of
companies, has joined Interline."
HIT will exclusively market and sub-license Interline's telephony
gateways to a number of other Korean service providers to leverage
their
existing network infrastructures.
"We have tested Interline Phone on both our domestic and international
networks and the results were very pleasing. Our testing focused on
three areas of concern in delivering a viable 'voice over the Internet'
(VoIP) service: the quality of voice, echo cancellation, and time delays
in the transmission of voice. It is difficult to satisfy each of these
criteria - even in a conventional phone system - but of all the VoIP
technologies we tested, only Interline Phone succeeded," said
Mr. Taik-ho Kim, the President of Hyundai Information Technology.
In order to work more closely with the major equipment manufacturers,
OzEmail also announced today that it is moving its Interline
headquarters to Silicon Valley. Sales and marketing personnel, along
with some engineers, will be opening an office in California shortly.
The majority of OzEmail's research and development staff will remain in
Australia.
OzEmail recently announced it is teaming with Cisco Systems, Inc.
(Nasdaq:CSCO) to facilitate the global deployment of Internet telephony
gateways, roaming authentication and settlement services. "The leading
companies in this industry - Cisco, Bay Networks and Ascend, to name a
few - are all based in Silicon Valley," said Chief Executive Officer,
Sean Howard. "Opening an office there will enable us to take advantage
of the intellectual capital that can be found in the region as
we continue to staff the office at all levels."
Interline is a service provider to an international consortium of
Internet telephony service providers. Built on technology developed by
OzEmail, the Interline VoIP solution provides a robust, secure Internet
telephone routing network with a entral billing and settlement system.
By removing the key obstacles to delivering VoIP services - technology
investment, voice quality, international termination agreements, billing
and settlement disputes - Interline makes it easy for ISPs to begin
delivering international VoIP services.
OzEmail is the leading provider of comprehensive Internet Services in
Australasia. The Company's Internet services are designed to meet the
different needs of its residential and enterprise customers ranging from
low cost dial up to high performance, continuous access services
integrating the Company's ISDN offering and consulting expertise.
Certain statements made herein that are not historical are
forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements may differ materially from actual
future events or results. The future performance of the Company involves
risks and uncertainties that could cause actual results to differ
markedly from those anticipated by such forward-looking statements.
Such
risks include but are not limited to the following: a limited operating
history for the Company; potential fluctuations in operating
results; competition; pricing pressure; dependence on third-party
suppliers of hardware and software; shortage of modems; dependence
on telecommunications carriers; management of growth; limited
market; a need for and risks of international expansion;
the existence of a new and uncertain market; customer
retention issues; rapid technological change; security
risks; the risk of system failure; formal licensing and joint
marketing agreements; patents and proprietary rights; infringement
claims; changes in government regulation; risks associated with
providing content including potential liability; dependence on
key personnel and need to hire additional qualified
personnel; uncertainty of currency exchange rates; need for additional
capital; enforceability of civil liabilities; antitakeover impact of
Australian foreign investment restrictions; control of the Company
by the Board of Directors; and possible volatility of ADS price. For a
more complete description of certain of such risks and uncertainties,
we refer you to the documents that the Company has filed from time to
time with the Securities and Exchange Commission ("SEC") including its
registration statement on Form F-1 dated May 28, 1996, its 1996 Form
10-K dated March 31, 1997, and its Form 10-Qs dated August 13, 1996,
November 14, 1996, May 8, 1997, August
13, 1997, and November 14, 1997. |
