PortaCom Wireless Inc. signed an agreement to acquire all the outstanding shares of Los Angeles-based Asian American Telecommunications Corp.
PortaCom said it will issue a total of 25.5 million common shares to AAT shareholders, fund that company’s ongoing operational expenses and contractual obligations, and retire up to $1.5 million of its outstanding liabilities after the closing of an equity financing.
The deal is subject to shareholder and regulatory approval as well as being subject to AAT completing a joint venture contract in China, PortaCom said.
The company announced AAT has signed a contract to form a joint venture called Huaneng American Telecom Co. Ltd. to provide financial, engineering and technical support for the construction and operation of a public switched telephone network in Sichuan province.
Approval from China’s Ministry of Foreign Trade and Economic Cooperation for the venture is still needed to satisfy that portion of the AAT acquisition agreement, PortaCom’s Chief Financial Officer Michael Christiansen said, but he expects to get approval within 60 to 90 days.
AAT is pursuing a second joint contract for a mobile wireless telecom venture in another, unnamed Chinese province.
In connection with the transaction, Max Bobbitt, president and chief executive officer of AAT, will become chairman of PortaCom’s board of directors.
Douglas MacLellan, president and CEO of PortaCom, will immediately assume the position of vice chairman of AAT to assist in completing telecommunications contracts in China currently under negotiation, the company said.
The AAT acquisition agreement is subject to the listing of PortaCom’s shares for trading on the NASDAQ system. PortaCom currently trades on the Vancouver Stock Exchange and over-the-counter.
In related news, the company said it will make a non-brokered private placement of about $20 million worth of units consisting of one common share and one-half warrant. Proceeds of this financing will be advanced to the company upon execution of the Chinese joint venture and prior to the closing of the private placement and the acquisition of AAT, PortaCom said.
In addition to its China ventures, a company spokesman said PortaCom also has pending deals in Vietnam, Cambodia and Latin America.