Newcall Calls A Halt To Ucc Takeover

Newcall Calls A Halt To Ucc Takeover

Newcall Group Limited (NGL) announced today that it had called a halt to negotiations to acquire the assets of UCC (2001) Limited and the shares of related companies, UCC Spectrum Limited and Newcall UCC Acquisition Company Limited. NGL had previously signed agreements for sale and purchase to make the acquisition, conditional on, amongst other things, approval by its shareholders and the securing of regulatory approvals. NGL chairman, Jim Bracknell, said that UCC’s failure to acquire any of the government’s first wave of regional broadband projects – it had been shortlisted for both Wairarapa and Northland – fundamentally changed the nature of the transaction between the two companies.

“We had intended the acquisition of UCC to give NGL new growth impetus by allowing our ISP, Iprolink, in the first instance to offer broadband to its customer base and then additionally to exploit the many opportunities offered by wireless broadband technology,” said Mr Bracknell.

Mr Bracknell said that UCC’s revenue and profits were far below projections making it an unattractive acquisition. NGL also questioned whether the vendors would be in a financial position to acquire the remaining debt of NGL’s cornerstone shareholder, Charoong Thai Wire & Cable Public Co Limited (CTW), and its associate CTW Beta Company Limited (CTW Beta), which was also a part of the series of transactions contemplated.

It was the intention to capitalise the debt acquired from CTW and CTW Beta through the issuance of NGL shares, again subject to shareholders’ approval. Because of the failure of the transaction to materialise, he said the group might not realize its goal of being completely debt free by the end of June.

“Under the circumstances we have decided that the value to shareholders had diminished to the point where we no longer wanted to pursue the acquisition of UCC and its affiliated companies, he said.

Mr Bracknell said he remained optimistic about NGL’s future, adding that it had much going for it. “We’ve got a healthy ISP with a strong customer base and revenue stream, we’ve successfully quarantined an $18m tax loss, we’ve cleaned up the balance sheet and we’ve got cash in the bank.” The group had also reported its first full year’s profit at the end of 2002.

Mr Bracknell added that NGL was renewing its efforts to find a New Zealand cornerstone shareholder and said he was presently in discussions with a number of investment bankers.

© Scoop Media