ChinaTel Group Inc. provides high speed wireless broadband and telecommunications infrastructure engineering and construction services. The company recently signed two stock purchase agreements calling for a $640 million investment into the company, which will equip it with enough funds to move forward with its expansion plans.
The combined investment represents 48 percent of the company’s total outstanding shares, valuing ChinaTel at more than $1.33 billion. By March 1, 2010, ChinaTel will have received $241 million, and said it expects to receive the remaining balance of $399 million by June 1, 2010.
“With this infusion of capital, we can pursue our global expansion plans, and accelerate the deployment of the Chinacomm network in the Peoples Republic of China (PRC). We expect to complete build-out of the first 12 PRC cities by June 2011. When completed, the Chinacomm network will be one of the largest wireless broadband networks in the world,” ChinaTel’s CEO George Alvarez stated in the press release.
The investment partners are Excel Era Limited, a Hong Kong-based investment group, and Isaac Organization Inc., a Canadian-based investor, both of which will pay $3.0075 price per ChinaTel share.
Per the agreement, Excel is investing $480 million, thereby acquiring about 159.6 million new shares of ChinaTel’s series A common stock to be issued, representing 36 percent of total shares issued and outstanding as of the closing date; Isaac is investing $160 million, and will acquire roughly 53.2 million newly issued shares, representing 12 percent of the total outstanding shares.
“We have worked very hard to execute transactions beneficial to both our shareholders and our new institutional investors. We selected these investment partners because they provide unique alliances that will facilitate ChinaTel’s ability to penetrate additional markets globally,” ChinaTel’s President Colin Tay stated.
The Isaac Organization, which previously served as a strategic advisor to ChinaTel, said its past experience with ChinaTel creates a familiarity that resulted in the agreement.
“We have been involved with ChinaTel in an advisory capacity and are very pleased to take a larger role with the Company. Being very familiar with the ChinaTel story, Isaac Organization seized the opportunity to invest in the next generation of a high-demand technology to meet the needs of rapidly emerging markets,” said Tony Isaac, CEO of Isaac Organization. “The timing was right for this investment, and we look forward to our increased role with and the future of ChinaTel.”