as many of you know, I am not a basher but have been tough on Tobin in pressing for answers to questions. in fairness and in the interest in getting his insight he has responded, and I expect that a complete reply to my questions will be forth coming. That is all one can ask.
Tobin Smith commented on his wall post:
"Michael...I will respond after market close today...have about three jobs too many right now which is why we are adding people every week...
Harold...CHTL team is running the deployment operations and will be running major parts of the ChinaComm network...as in ALL the Ministry applications, all of the VPN work, all of the network maintenance and upgrades, QOS engineering etc..
We will talk more about this reality: CECT-Chinacomm basically raised $400M from PRC and high level Party people and built a 17K fiber optic network...and by 2007 they were out of money and did NOT have a wireless broadband network up and running in Beijing yet as required by PRC and MIIIT to get their license renewed for next 5 years...
It was Alverez and Colin Tay--the privately held TrussGroup--that was called in to save the day--and I mean save. This is how Trussnet negotiated the rights to buy 49% of the Chinacomm Network--CECT-Chinacomm was in a very rough patch and NEEDED the 20 years of network building expertise of TrussGroup....
AND they needed their money---which is why TrussGroup fronted more than $75M in deployment and overhead to CECT-Chinacomm as their 49% partner...
This is a point that we have NOT really made because of the political sensitivity--but it is absolute fact.
Alvarez and Tay got snookered into believing the people who convicned them to go the "reverser merger" route in 2008 would raise the $200M and they would use that cash to buy the 49% and then do a secondary later if more capital was needed...that raise obviously failed and THEY stood up and provided the capital out of their own pockets to keep ChinaComm Network alive up and through the Olympics....
IN fact, they continued to write checks for negative cash flow up to January 2009--they stopped because the conversion to paid service from free went so well...
EVERyone at CECT-Chinacomm I have met with considers' Alvarez and Tay the SAVIORS of CECT-Chinacomm---without their fronting of the Beijing Wi-max/Wifi mesh network the BTS license (Basic Telephone Service carrier license) would NOT have been renewed and CECT-would have been merged into another carrier...instead it got auto-renewed in Auggust 2008 and the day was saved...
....without TrussNet Ltd building out the Beijing network CECT-Chinacomm would NOT have gotten to positive cash flow in Beijing in 2009 and NOT to the >$8M a MONTH they are at today according to our sources.
So perhaps NOW you can understand why CECT-Chinacomm has been so understanding on the delays in capital raising from their 49% partner who is charge of raising the capital for the ChinaComm Network...without TrussNet/Alvarez/Tay et al...there absolutely would NOT BE a ChinaComm Network to build and for us to invest in....
In our next full report on CHTL/CECT-ChinaComm Network we will go into more detail on the timeline pre and post equity funding...
But a KEY aspect of understanding the partnership of CECT-Chinacomm and ChinaTel Group, Inc. is you HAVE to understand that the private "parent" of CHTL TrussNet Ltd. and its principals George Alvarez and Colin Tay saved CECT-Chinacomm from disaster...and THAT is why CECT-Chinacomm is so loyal and so values their partnership with CHTL.
Loyalty is a VERY big thing in China culture--it used to be too in the USA...but that is ANOTHER topic for another day
Tobin Smith, Chief Research Officer
Still can't believe I let myself get pulled into this crazy BS. And, the more TS tries to explain things the worse those things get. It would be funny, if it hadn't been such an expensive lesson.
"We will give you our engineering expertise, man-hours and we will throw in $70 million bucks, if you will only allow us to buy 49% of the company with another $200 million."
Say what? Supposedly, the only reason Chinacomm still exists and is now pulling in $8M a month is because of the CHTL bunch. Yet, the money flow is completely one-sided.
Are they idiots, or do they think we are?
So, Trussnet paid $200 mil for 49% of Chinacomm, when Chinacomm was on the brink of bankruptcy.
Interesting how the actual facts are disclosed little by little.
If the PRC owned 100% of Chinacomm prior to the deal with Trussnet, how is that Chinacomm was in such a dire position?
Why did Chinacomm need foreigners, Tay and Alvarez, to save it? No one in China thought it was the deal of a lifetime?
Chinacomm was so desperate for cash and Tay and Alvarez couldn't negotiate a purchase for all of Chinacomm or at least a 51% controlling interest?
NEM, nothing in the post suggests that CHTL paid $200 million for 49% of Chinacomm. It says that "Alvarez and Tay got snookered into believing the people who convicned them to go the "reverser merger" route in 2008 WOULD raise the $200M and they would use that cash to buy the 49% and then do a secondary later if more capital was needed...that raise obviously failed and THEY stood up and provided the capital out of their own pockets to keep ChinaComm Network alive up and through the Olympics...."
Such capital was approximately $75 million, as stated somewhere else in the post.
For your infor, no one can purchase a majority interest in a public service company in China.
Reverse merger? Old news. Funding needed to pay for work completed by Trussnet and to pay off loans made by Trussnet O.K 49% of chinacomm to help finish Beijing ect. Resonable. Sweat equity!
Trussnet got the short end of the stick. CHTL should already own the 49%