newsat rejects $50m bid

http://www.news.com.au/adelaidenow/story/0,22606,26048828-5003680,00.html


NewSat rejects $50m bid

VALERINA CHANGARATHIL
September 09, 2009 12:00pm

SATELLITE Services provider NewSat has rejected a hostile takeover bid from a former business partner.

EWC Payments Pty Ltd, founded by Matthew Starr, is offering one EWC share for every 25 NewSat shares and one EWC option for every 29 NewSat options.

The offmarket bid values NewSat at about $50 million - a 35 per cent premium to its market capitalisation of $37 million at its yesterday's closing price of 6c, Mr Starr said in a letter to NewSat chief executive Adrian Ballintine.

Mr Starr has adopted a nominal share value of 20c for each EWC share, but the company is not a listed entity. NewSat offers a full range of managed and communication services from its teleport sites at Adelaide (Mawson Lakes) and Perth.

Mr Starr had attempted a reverse merger with NewSat in 2003 - then known as Multiemedia - but split over disagreements with Mr Ballintine over the direction that the company should take.

Mr Starr then claims to have independently established a private company business model exactly like that proposed to Multiemedia in 2003 which has achieved ``turnover figures that have totally dwarfed NewSat's woeful revenue and profit figures.

He claims EWC revenues were $170 million in 2007 and $474 million in 2008. In its response, NewSat said it had ``no prior knowledge or notice of this takeover offer, nor of EWC Payments Pty Ltd. It notes that this company has paid share capital of $10.00.''

Mr Starr responded with another statement, which did not deny the paid-up capital amount, but drew attention to being a wholly-owned subsidiary of a Swiss multinational corporation based in Geneva.

``NewSat's revenue was a paltry figure less than $20 million and NewSat has NEVER made a profit of any kind, yet accumulated losses well over $100 million,'' Mr Starr said in his statement.

``This takeover will significantly benefit long-suffering shareholders,'' he added. If his takeover offer is successful, NewSat would continue to trade as NewSat and would continue its existing satellite businesses, with EWC's existing business units, including credit card processing, money remittance, to be rolled into the new merged entity.

NewSat recently announced a 3-year contract through a partnership with U.S.-based Proactive Communications Inc, to provide communications for the US military operations in Afghanistan, to be serviced via the Adelaide teleport.

NewSat directors were unavailable for comment.