Alyst Acquisition Corp. has announced that its merger target, China Networks Media Limited have entered into a letter of intent with Zhuhai Broadcasting and Television Station , containing the principal terms for the formation of a 50:50 joint venture (the “Joint Venture”) between China Networks and Zhuhai TV. If the transactions contemplated by the LOI are consummated, Zhuhai TV will join the China Networks’ television joint ventures in Kunming and Yellow River as the newest member of its advertising network, expanding the population reach of China Networks to a total of approximately 38 million viewers.
Under terms of the LOI, Zhuhai TV will enter into contracts under which China Networks will, through the Joint Venture, act as the exclusive advertising arm for all Zhuhai TV’s television channels for 20 years. Zhuhai TV will also contribute its library of media content to the Joint Venture. China Networks will pay approximately $11 million to Zhuhai TV to obtain a 50% ownership stake in the Joint Venture. China Networks will manage and control the Joint Venture and will consolidate the financial results thereof. Zhuhai TV will retain control over broadcasting operations and content decisions.
Zhuhai TV was established in 1985. Unaudited 2008 advertising sales for the station were approximately $12.6 million. Zhuhai TV broadcasts on two self-owned TV channels and four channels under an arrangement with Hong Kong TV stations. The station offers news, general, movie, drama series, English news, children shows, entertainment and government affairs programming to the approximate 1.5 million viewers in Zhuhai and surrounding areas.
Li Shuangqing, Chairman and Chief Executive Officer of China Networks stated, “The addition of Zhuhai to our fast growing network of advertising joint ventures is the continuation of our plan to build a robust network of TV stations in secondary and tertiary markets in China. Major advertisers who previously had limited access to the viewers in these markets will now be afforded efficient access through our Beijing sales office.”
The transactions described by the LOI are contingent on, among other things, finalizing definitive documentation and completion of an audit of Zhuhai TV’s advertising functions in accordance with US GAAP and PCAOB standards. China Networks management expects to execute definitive documentation covering the terms of the LOI before the end of June 2009 and for the contemplated transactions to be consummated prior to December 31, 2009. There can be no assurance, however, that a definitive agreement will be executed, the requisite audit completed or the contemplated transactions consummated within the expected timeframe or ever.
Alyst issued a press release on August 18, 2008, announcing it had entered into an agreement and plan of merger to acquire all of the issued and outstanding shares of China Networks, which owns and is acquiring broadcast television advertising rights in the People’s Republic of China. As part of the transaction, Alyst proposes to redomesticate to the British Virgin Islands by means of merging with its wholly-owned subsidiary, China Networks International Holding Ltd. (“CNIH”), immediately prior to consummating its transaction with China Networks. On January 30, 2009 Alyst filed with the SEC a preliminary proxy statement and registration statement on Form S-4 in connection with the proposed merger.