Shanghai, March 24 (Bloomberg) -- China Infohighway Communications Ltd., China's third largest Internet provider, denied it agreed to sell a 90 percent stake in the company to Hartcourt Companies Inc. of the U.S. and said there are no plans to bring foreign investors into the company.
''This is sheer nonsense,'' said Lu Qun, an official in Infohighway's publicity department.
Foreign participation in the Chinese Internet market is currently banned.
Hartcourt issued a statement in Los Angeles yesterday citing President Alan Phan as saying it agreed to buy 90 percent of Infohighway subject to conditions.
These include an independent valuation that would establish the worth of the Chinese company at more than $80 million, and Hartcourt arranging $30 million in financing to fund Infohighway's expansion and the repayment of some of its debts.
Lu said Infohighway, part owned by the Chinese government, plans to reshuffle its shareholdings in the near future but foreign parties definitely won't be considered.
Infohighway has no port of its own, instead using facilities supplied by China Telecom, the state telecommunications group with a virtual monopoly on the domestic market.
Last year Infohighway was embroiled in controversy when senior managers couldn't agree on development strategies. Its general manager, Zhang Shuxing, resigned as a result.
Infohighway started in May 1995 as a private company but expanded with the entry of three government-backed firms as shareholders. It has registered capital of 80 million yuan ($9.6 million).
China now has about 2.1 million Internet users, including Infohighway's 70,000 customers.
Computer Economics Inc., a U.S.-based research firm forecasts that China's user numbers will reach 37.3 million by 2005, putting it in second place behind the U.S., which by then will have 126.6 million users.
(Infohighway's web site: www.ihw.com.cn)
00:19:05 03/24/1999
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