CinTel
Agrees to Acquire 51% of Phoenix Semiconductor and Telecommunication (Suzhou)
Co., Ltd. in China
LOUISVILLE,
KY--(Businesswire)—Oct
30,
2006 -- CinTel Corp. (CinTel) (OTC BB: CNCN.OB), Korea's top Internet traffic
management (ITM) solution provider, is pleased to announce it has signed a
stock
purchase agreement with STS Semiconductor & Telecommunications Co., Ltd
(STS) to acquire fifty-one percent (51%) ownership and equity interests of
Phoenix Semiconductor Telecommunication (Suzhou) Co., Ltd. (PSTS) for an
aggregate purchase price of $16.5 million. STS is a KOSDAQ-listed subsidiary
of
BoKwang Group, and this purchase will give CinTel a close strategic alliance
with the BoKwang Group.
Deloitte
Anjin LLC performed a valuation of PSTS as part of CinTel’s
due
diligence. PSTS’s
value,
depending on discount rates ranges, is between $54M and $83M USD based upon
the
Discounted Cash Flow (DCF) method, which is based on forecasted cash flows
from
the Company’s
operations discounted to the present value.
This
agreement offers CinTel a unique opportunity to realize its new long-term goal
of expansion into a “Semiconductor
Specialized Company”
by
consolidating various parts and/or companies involved in the semiconductor
industry. Management believes this acquisition of a majority stake in PSTS
will
ensure that CinTel’s
stream
of profits will grow exponentially in the near future.
This
acquisition will allow CinTel to shift from its core business of ITM (Internet
Traffic Management), an increasingly competitive market due to changes in
technology and solutions, to one of the fastest growing markets in the
technology realm. Semiconductor, NAND Flash and LCD chips, which are the focal
products of PSTS, are high value-added products. CinTel expects that its
products’
revenues
will grow at significantly better rates than industry averages.
PSTS’s
major
customer contract is with Samsung Electronics and Hynix. Sales in 2005, when
production commenced, were about $12.8 million and sales in 2006 are expected
to
be more than $50 million with a long-term strategic contract with Samsung
Electronics. Sales in 2007 are expected to also grow rapidly, as are profits.
CinTel’s
expects
that the expansion of its semiconductor business will start from the
fast-developing and emerging Chinese market and gradually move into the USA
and
EU markets. CinTel will continue to improve its shareholder’s
stock
value and intends to work towards listing on the NASDAQ Small Cap or American
Stock Exchange markets as soon as the opportunity arises.
Sang-Don
Kim, the CEO of CinTel, said, “CinTel’s
acquisition of a majority stake in PSTS, with its solid business model and
explosive growth and profit potential, is
quite
meaningful to CinTel as a first step in a part of our long-term growth strategy.
CinTel will also be able to fulfill its promise to investors with positive
profit results this year. PSTS will be able to grow rapidly with the strong
support of key customers such as Samsung Electronics Corporation, from which
it
was originally spun-off. I am confident this close strategic partnership with
STS, BoKwang Group and PSTS’s
customer Samsung Electronics Corporation will provide all our shareholders
the
opportunity to see significant benefits and shareholder value in the near
future.”
Phoenix
Semiconductor and Telecom was founded by STS in China in 2004 by acquiring
certain parts of the packaging production lines from Samsung Electronics
Corporation’s
China
plant (SESS). It began mass production in 2005 and its main customers are
Samsung Electronics and Hynix, two of the largest semiconductor manufacturers
in
the world. PSTS’s
main
products are semiconductor packaging, NAND flash memory and LCD
assembly.
STS
Semiconductor and Telecommunication is a subsidiary of BoKwang Group and the
biggest semiconductor company in BoKwang’s
network. It began as a semiconductor packaging and testing specialty company
after spinning off from Samsung Electronics in 1998 and is now becoming a
leading semiconductor packaging company, as well as, a total solution provider
for memory application for home appliances, semiconductor, TFT-LCD application
products. STS was listed on KOSDAQ in 2001 and is being publicly traded
now.
From
its
beginnings as a producer of TV cathode ray tubes and electronic materials in
1983, BoKwang group has grown to a major conglomerate with over 30 subsidiary
companies in hi-tech, leisure, finance, retail, logistic and culture businesses.
CinTel
Corp., based in North America with its main business operations in Korea,
provides enterprise technology solutions that deliver faster internal and
external network service. Founded in 1997, CinTel introduced Korea's first
dynamic server load balancer, which has now evolved into a world-class product
line with ever expanding solutions with key partners and internal development.
CinTel's award-winning Internet Traffic Management (ITM) solutions are marketed
to customers worldwide, enabling the company's customers to improve Internet
and
network traffic management, service levels, secure content, user experience,
and
reduce server loads and bandwidth demands. While CinTel maintains its position
as a leader in ITM through continuous research and development efforts, it
has
also begun expansion into creative new markets and worldwide distribution of
Korean based technologies. CinTel is also a recognized leader in Content
Delivery Network (CDN). For additional information, please visit CinTel
Corp’s
website.
This
press release may contain statements (such as projections regarding future
performance) that are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those projected as a result of certain risks and uncertainties, including
but not limited to those detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
