News Out !!!! Looks Excellent!!
FOR IMMEDIATE RELEASE
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February 17, 1999 VSE Symbol: FTL
FIRST TELECOM CORPORATION SIGNS LETTER OF INTENT TO ACQUIRE VANCOUVER TELEPHONE COMPANY AND ALL ITS SUBSIDIARIES.
TERMS
Vancouver, Canada. First Telecom Corporation (the "Company") VSE symbol FTL, is pleased to announce that it has entered into a letter of intent (the "Letter") with Vancouver Telephone Company Limited ("Vancouver Telephone") pursuant to which the Company will raise at least $6,500,000 to be invested in Vancouver Telephone and concurrently complete a share exchange pursuant to which the Company will acquire all of the outstanding equity of Vancouver Telephone.
Pursuant to the Letter, the Company agrees to purchase from Vancouver Telephone a convertible debenture in the principal amount of $500,000 upon receipt of regulatory approval and a convertible debenture in the principal amount of $1,000,000 on or before June 30, 1999. The funds will be used by Vancouver Telephone for working capital purposes for the business conducted by Vancouver Telephone and its subsidiaries. Upon completion of the initial $1,500,000 investment, the shareholders of Vancouver Telephone will vote their shares so that 1/3 of the board of directors of Vancouver Telephone will be comprised of appointees from the Company.
The Company has also agreed to use its best efforts to provide Vancouver Telephone with $5,000,000 in a second financing within six months from the closing of the initial investment at a minimum issuance or conversion price of $2.50 per First Telecom share. Concurrently with the closing of this second investment, the Company will acquire all of the issued and outstanding shares of Vancouver Telephone for that number of the Company's shares equal to the greater of:
(a) 18,000,000 shares; or
(b) 66.67% of the fully diluted share capital of the Company upon the closing of all the transactions contemplated in the Letter
The closing of the transaction contemplated by the Letter is subject to board approval of both the Company and Vancouver Telephone, the negotiation and execution of a formal acquisition agreement, the receipt of all regulatory and shareholder approvals and the completion of due diligence satisfactory to each party.
OVERVIEW OF VANCOUVER TELEPHONE COMPANY
Vancouver Telephone, its' Canadian subsidiaries VTC Canada, Enhanced Telecom Services Inc., and its U.S. subsidiary Sattel Global Networks Inc. consolidated revenues for fiscal 1998 are estimated to be over $17 million. Vancouver Telephone and its Canadian subsidiaries VTC Canada and Enhanced Telecom Services supply long distance service, local line access, internet access, travel cards (calling cards) and telecommunication equipment, business phone systems, prepaid telephone cards, Clearnet digital PCS phones, and presently have over 12,000 active customers with approximately 25,000 lines in service in British Columbia, with a further 3,000 active customers in the Metropolitan Toronto area (the Toronto office opened in January 1998).
Vancouver Telephone's wholly-owned U.S. subsidiary, Sattel Global Networks Inc., is located in Chatsworth, California. It's main business is the design and manufacture of commercial satellite Demand Assignment Multiple Assignment (DAMA) systems for high-end PTT (public telephone & telegraph) service providers. Sattel is focused exclusively on DAMA sales to PTT's in the growing foreign rural telecom market. During its first 12 years of operation Sattel had approximately $150 million in total sales. Sattel derives revenue through: 1) sale of DAMA system engineering and customization services to meet specific customer requirements, 2) sale of network control centers (NCC's), 3) sale of earth station equipment, primarily modems, and 4) after-sale customer support services. Item (3) represents the bulk of Sattel's sales. With key customers planning to greatly expand their DAMA networks immediately very significant sales growth potential is anticipated.
Sattel was the first company in the world to re-use a satellite retrieved from space by the NASA space shuttle. Under a US$130 million prime contract from the Indonesian government, Sattel refurbished and relaunched the Palapa B2-R satellite in May 1990 with the assistance of subcontractors that included Hughes Aircraft (refurbishment) and McDonnell Douglas (launch services).
Sattel's technology in network control centers and modems is one of the most advanced in the world. Sattel has become the world leader in Single Channel per Carrier (SCPC) DAMA systems for public telephone networks. SCPC-DAMA is widely recognized as the most cost effective and flexible telecommunications system for wide area thin-route traffic networks. Its use is rapidly expanding in third world countries. As a result, Sattel's SCPC-DAMA satellite terminals cover most of the globe, operating in over 400 cities in Asia, the Pacific, and Central America. Sattel's customers include communications infrastructure contractors, public telephone & telegraph companies and other telecommunications carriers, producers and distributors of news and entertainment content, corporations and internet service providers (ISP's). A partial list of customers include major government owned public network service providers such as Telstra of Australia, the largest telephone company in the southern hemisphere, Perumtel Telkom of Indonesia, Guatel of Guatemala to mention a few.
Sattel's earth station installations for public and private networks are located in over 20 countries including: Australia, China, C.I.S.(Moscow), Cook Islands, Fiji, Guatemala, Indonesia, Kazahkstan, Kiribati, Marshall Islands, Nauru, New Zealand, Nigeria, Niue, Philippines, Sakhalin Island, Syria, Taiwan, Tuvalu, U.S.A., and Western Samoa.
For further information please contact:
Christian Brulé tel:(604) 602-7114 fax:(604) 602-7134 e-mail:cbrule@netcom.ca
Websites to view are Vancouver Telephone Company Limited www.vtcinet.com
Sattel Global Networks www.sattel.com
FIRST TELECOM CORPORATION
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