First Telecom proceeding with Vancouver Telephone acquisition
First Telecom Corp FTL
Shares issued 2,366,686 Feb 11 close $0.85
Tue 27 Apr 99 News Release
Mr. Richard Liu reports
First Telecom will be proceeding with the terms of its letter of intent
with Vancouver Telephone Company Limited, pursuant to which the company
intends to raise at least $6.5-million to be invested in Vancouver
Telephone, and complete a share exchange to acquire all of the outstanding
equity of Vancouver Telephone.
The company and its management have accepted the following conditions to a
resumption of trading in the company's shares imposed by the Vancouver
Stock Exchange:
a) The $500,000 private placement originally announced in Stockwatch Jan.
27, 1999, and subsequently amended to a brokered placement on March 5,
1999, will now be revised such that the issuance of the 25-cent
special warrants is subject to shareholder approval. If shareholder
approval is not obtained, the placees will receive the convertible
debenture in place of the special warrants. The warrant exercise price
has been revised to 50 cents in the first year and 60 cents in the
second year.
b) The existing insiders of the company undertake to restrict the selling
of their own shares pending the completion of the share exchange with
Vancouver Telephone, such that any net proceeds from the sale of
shares by insiders is re-invested in the company by way of private
placement.
c) The company has relocated its offices to West 7th Avenue in Vancouver.
d) Selected disclosure documents on Vancouver Telephone have been placed
in the public file at the VSE, and will be available for viewing
during normal office hours.
e) The company will provide the VSE with a full filing, including
completion of the sponsorship review, within 60 days of the resumption
of trading.
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 principle
amount of $1-million on or before June 30, 1999. The debentures carry an
interest rate of prime plus 2 per cent per year, and are convertible upon
completion of the share exchange into common shares which collectively
represent 10 per cent of the capital of Vancouver Telephone on a fully
diluted basis. The funds will be used as working capital for the business
conducted by Vancouver Telephone and its subsidiaries. Vancouver Telephone
reserves the right to terminate its obligations in the event that the
company is unable to arrange the balance of the initial investment by June
30, 1999. Upon completion of the initial investment, the shareholders of
Vancouver Telephone will vote their shares so that one-third 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-million in additional financing within six months from
the closing of the initial investment at a minimum issuance or conversion
price of $2.50 per FTL share. Concurrently with the closing of this second
investment, the company will acquire all of the issued shares of Vancouver
Telephone for that number of the company's shares equal to the greater of
18 million shares and 66.67 per cent of the fully diluted share capital of
the company upon the closing of the transactions contemplated in the
letter. The fully diluted share capital of the company immediately prior to
the share exchange is not to exceed nine million shares.
Concurrently with the closing of the acquisition of all the shares of
Vancouver Telephone, the current shareholders of Vancouver Telephone will
appoint the majority of the directors of both companies. At that time,
Stanley Cohen, the president and chairman of Vancouver Telephone, will be
appointed as president and chairman of the company, and the existing
management of Vancouver Telephone will retain their positions.
A finder's fee in form and substance acceptable to the VSE will be payable
to Joist Management Ltd., a Hong Kong based company, for introducing and
assisting in this proposed transaction. The amount of the fee has not been
determined at this stage, but could be based on the total consideration
paid for Vancouver Telephone.
The closing of the transactions contemplated by the letter is subject to
the negotiation and execution of a formal acquisition agreement and the
receipt of applicable regulatory and shareholder approvals.
Ed Gallagher and Erwin Liem have resigned as director and corporate
secretary. Maria S.M. Wong has been appointed to the board, and Emily Nakai
is the corporate secretary. Ms. Wong, a chartered accountant, is
vice-president finance of Macdonald Development Corporation.
The company has granted stock options to directors, officers and employees
to acquire up to 286,000 shares at 43 cents until March 5, 2001.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com |
