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ChinaTel Group Signs Stock Purchase Agreement
With Asia Special Situation Acquisition Corp.
July 16, 2008
ChinaTel Group Inc. (OTCBB: CHTL) ("ChinaTel," "CHTL" or the
"Company") is pleased to announce that on July 8, CHTL entered into
a Stock Purchase Agreement (the "Stock Purchase Agreement") with
Asia Special Situation Acquisition Corp., a Cayman Islands
corporation ("ASSAC").
George Alvarez, Chief Executive Officer of CHTL, stated: "On behalf
of the board of directors, we are pleased to have the members of
ASSAC as our long term partners and we look forward to creating
value for all of our shareholders."
The Stock Purchase Agreement provides between $202 million and $270
million for the investment by ASSAC into ChinaTel. ASSAC is a
Business Combination Company(TM) formed to make acquisitions of
businesses located in Asia. Its common shares trade on the American
Stock Exchange under the symbol "CIO." ASSAC maintains $115 million
in trust, which is available for any business combination or
acquisition approved by the holders of a majority of its publicly
traded shares. In the event ASSAC consummates the transaction with
ChinaTel, it will acquire not less than 51% of the issued and
outstanding shares of Company Class A Common Stock at the time of
closing through the purchase of either Class A Common Stock or a
combination of Class A common stock and shares of ChinaTel's voting
Series A Preferred Stock convertible into Company Class A Common
Stock. The per share price for the Company's Class A Common Stock is
$2.25 per share.
ASSAC is also to receive shares of Company Class B Common Stock in
such amount that will assure that ASSAC receive 51% of the voting
power of all classes of Common Stock of ChinaTel at the transactions
close. Company Class B Common Stock votes at the rate of 10 votes
per share. ASSAC's agreement to purchase ChinaTel's securities is
subject to certain conditions, which includes completion of a
satisfactory due diligence investigation (including legal
confirmation of the renewed WiMAX license referred to below),
securing shareholder approval for the transaction and raising
funding in ASSAC (in addition to the amount maintained in trust) of
not less than an additional $115 million.
ChinaTel, through its controlled subsidiary Trussnet USA Inc., has
entered into a number of agreements associated with the operation
and financing of a 3.5 GHz wireless worldwide interoperability for
microwave access ("WiMAX") wireless broadband operation in 29 major
cities (the "WiMAX Installations") throughout the People's Republic
of China ("PRC"). The WiMAX Installations will be operated by CECT
Chinacomm Communications Co., Ltd. ("ChinaComm"), a PRC company,
under a renewed WiMAX license to be issued by the Ministry of
Information Industry ("MII") of China. Upon consummation of ASSAC's
purchase of a majority of ChinaTel's capital stock, an aggregate of
$196 million shall be utilized by the Company to finance the
installation and operation of the WiMAX Installations. The Company
is obligated to provide funding to ChinaComm within 20 business days
after the renewed WiMAX license is issued by the MII.
There can be no assurance that the renewed WiMAX license will be
issued to ChinaComm or that the transactions contemplated by the
Stock Purchase Agreement with ASSAC will be consummated.
About ChinaTel Group Inc. (OTCBB: CHTL)
ChinaTel Group Inc. owns Trussnet USA, Inc. ('Trussnet'), a
telecommunications infrastructure engineering and construction firm
with principal operations in mainland China and that has entered
into a partnership with a Wholly Owned Foreign Enterprise (WOFE) in
the Peoples Republic of China to build and deploy a 3.5GHz wireless
broadband system in up to 29 cities across the PRC with and for
CECT-Chinacomm Communications Co., Ltd. For more information visit
www.chinatelgroup.com.
About Asia Special Situation Acquisition Corp.
Asia Special Situation Acquisition Corp. is a Business Combination
Company(TM), or BCC(TM), formed for the purpose of acquiring all or
a majority interest in one or more unidentified operating
businesses, through a capital stock exchange, asset acquisition,
stock purchase, or other similar transaction, including obtaining a
majority interest through contractual arrangements. The Company
intends to identify prospective acquisitions that are either located
in Asia, provide products or services to consumers located in Asia,
or invest in Asia. The Company's efforts to identify a prospective
target business will not be limited to a particular industry or area
in Asia, although the Company initially intends to focus its efforts
on acquiring an operating business in the leisure and hospitality or
financial services industries, that either invests in, is located in
or provides products or services to consumers located in China.
"Business Combination Company" and "BCC" are service marks of Maxim
Group LLC.
Notice regarding forward-looking statements
This news release may contain forward-looking statements or
information. Forward-looking statements or information include
statements regarding the expectations and beliefs of management.
Forward-looking statements or information include, but are not
limited to, statements or information with respect to known or
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements
or information. Forward-looking statements or information are
subject to a variety of risks and uncertainties which could cause
actual events or results to differ from those reflected in the
forward-looking statements or information, including, without
limitation, risks and uncertainties relating to obtaining financing
to meet the Company's current or future plans and other risks and
uncertainties, including those described under "Risk Factors" in the
Company's Annual Report on Form 10-KSB which is on file with the
Securities and Exchange Commission, as well as the Company's other
SEC filings. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in
forward-looking statements. Accordingly, readers are advised not to
place undue reliance on forward-looking statements or information.
The Company does not undertake any obligation to publicly release
revisions to any "forward-looking statement," to reflect events or
circumstances after the date of this news release, or to reflect the
occurrence of unanticipated events, except as is required under
applicable securities laws.
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