From RB 482. Informative post.
The major shareholder of China Infohighways owns about 90% of the stock interest. He resigned from CI in '98, and hasn't been very active in the companies growth...nevertheless he is very well-connected in China, especially with the regulatory arms of China. He's interested in seeing CI on the NASDAQ, and approached Phan through some intermediarys (unbeknownst to the CI management). Phan OK-ed the deal to give the CI majority shareholder a equity position in HRCT, in exchange for a 12 year exclusive JV of CI and HRCT (after 12 years it is freely available for renewal by HRCT). That was and still is the deal....
What occured next is what is widely misunderstood. A contingent of the CI management got wind of the deal, and didn't like that they were not included in the merger plans...so they exploited the PR in two ways...on the front, for the media, they said that the deal was nonsense, that they had heard nothing whatsoever...behind the media scene they clained that HRCT was, even including the CI merger, didn't conduct over 50% of its business in China...the first issue was not an obstacle, when you've got 90% of the shareholder interest on your side, it's not a problem if the management doesn't like it....the second issue was more tangible, thus the spin-offs and sell-offs of HRCT assets. If this was a non-deal, the sell-off and spin-off would not have occured. It is a deal, and will still occur...during the first week of May Phan is going to China, he will be meeting with management of CI in order to smooth the transition. There have already been major shake-ups of the management following the misgided public announcements lat month. The majority holder of CI will meet with Phan directly, and they will work out the details. Phan is very politically connected. Most likely a letter of intent will be signed by the two parties, and a date in June will be announced for the closing of the deal...the PR will be released by both HRCT and CI, the price will jump a little in the AM, but not a lot, as people will be confused and skeptical, then the latter part of the day it will rocket, closing strong....playing for the whole next week with gappers and baggers....remember CI currently is an ISP with 80,000 users last year and near 120,000 users this year in China, making it the 3rd largest ISP in China...XNET has 20,000, GTCI has 35,000...IMOT doesn't release their numbers but they are not one of the bigger players....in addition, CI has 2 e-commerce sites that are already bringing in revenue...the final valuation of HRCT will depend on the equity placement...basing as a competitor XNET, I came up with the following figures (I would be thankful if i am corected for any mistakes here):
CI/HRCT---120,000 ISP, 20, million shares.
XNET--20,000 ISP, 20 million shares.
That makes CI roughly 6x's as large as XNET, with the same number of shares outstanding....
For CI?HRCT, the equity placement is for 80 million, and I show how many additional shares this would equal w/the $ amount of the placement:
$2: 40 million......60 million outstanding
$4: 20 million......40 million outstanding
Even if it were 3x as many shares outstanding as XNET, it would still have a greater valuation(by 3x)--based on ISP user--than XNET, which is currently about $5 per share....of corse, XNET has been hyped to the hilt, and HRCT slammed to the dredge, so I'd guess we'd see a price more or less equal, and expect the bashers who lost on the first round to become even more harsh than the uninformed spokespersons for our well-being that we currently have on this thread....once the news becomes solid, next month, I'll come out with a more detailed financial analysis and comparison of the China internet players in the ISP realm... The major shareholder of China Infohighways owns about 90% of the stock interest. He resigned from CI in '98, and hasn't been very active in the companies growth...nevertheless he is very well-connected in China, especially with the regulatory arms of China. He's interested in seeing CI on the NASDAQ, and approached Phan through some intermediarys (unbeknownst to the CI management). Phan OK-ed the deal to give the CI majority shareholder a equity position in HRCT, in exchange for a 12 year exclusive JV of CI and HRCT (after 12 years it is freely available for renewal by HRCT). That was and still is the deal....
What occured next is what is widely misunderstood. A contingent of the CI management got wind of the deal, and didn't like that they were not included in the merger plans...so they exploited the PR in two ways...on the front, for the media, they said that the deal was nonsense, that they had heard nothing whatsoever...behind the media scene they clained that HRCT was, even including the CI merger, didn't conduct over 50% of its business in China...the first issue was not an obstacle, when you've got 90% of the shareholder interest on your side, it's not a problem if the management doesn't like it....the second issue was more tangible, thus the spin-offs and sell-offs of HRCT assets. If this was a non-deal, the sell-off and spin-off would not have occured. It is a deal, and will still occur...during the first week of May Phan is going to China, he will be meeting with management of CI in order to smooth the transition. There have already been major shake-ups of the management following the misgided public announcements lat month. The majority holder of CI will meet with Phan directly, and they will work out the details. Phan is very politically connected. Most likely a letter of intent will be signed by the two parties, and a date in June will be announced for the closing of the deal...the PR will be released by both HRCT and CI, the price will jump a little in the AM, but not a lot, as people will be confused and skeptical, then the latter part of the day it will rocket, closing strong....playing for the whole next week with gappers and baggers....remember CI currently is an ISP with 80,000 users last year and near 120,000 users this year in China, making it the 3rd largest ISP in China...XNET has 20,000, GTCI has 35,000...IMOT doesn't release their numbers but they are not one of the bigger players....in addition, CI has 2 e-commerce sites that are already bringing in revenue...the final valuation of HRCT will depend on the equity placement...basing as a competitor XNET, I came up with the following figures (I would be thankful if i am corected for any mistakes here):
CI/HRCT---120,000 ISP, 20, million shares.
XNET--20,000 ISP, 20 million shares.
That makes CI roughly 6x's as large as XNET, with the same number of shares outstanding....
For CI?HRCT, the equity placement is for 80 million, and I show how many additional shares this would equal w/the $ amount of the placement:
$2: 40 million......60 million outstanding
$4: 20 million......40 million outstanding
Even if it were 3x as many shares outstanding as XNET, it would still have a greater valuation(by 3x)--based on ISP user--than XNET, which is currently about $5 per share....of corse, XNET has been hyped to the hilt, and HRCT slammed to the dredge, so I'd guess we'd see a price more or less equal, and expect the bashers who lost on the first round to become even more harsh than the uninformed spokespersons for our well-being that we currently have on this thread....once the news becomes solid, next month, I'll come out with a more detailed financial analysis and comparison of the China internet players in the ISP realm... |
