Newcall plans reverse leap into NZ Salmon

By Richard Braddell

WELLINGTON - New entrant telco Newcall Communications plans to hit the stock exchange board later this year through a reverse takeover of listed cashbox New Zealand Salmon.

Under the proposal, NZ Salmon would pay $9 million for Newcall, to be satisfied through the issue of 81.5 million new shares that would leave Newcall's Asian-based shareholders in control of 85 per cent. The restructured NZ Salmon would then be renamed Newcall.

The deal is subject to regulatory and stock exchange consents as well as the approval of NZ Salmon shareholders, who will meet late next month to vote. NZ Salmon currently has 13.7 million shares on issue. Its price, which had languished below 20c until three weeks ago, leapt in days preceding the announcement to close 6c higher at 49c yesterday.

Taking the $9 million to be paid for Newcall, the reconstructed company would have capital of about $15 million, given the net $1.7 million of cash within NZ Salmon and between $4 million and $5 million to be raised in a subsequent rights issue to existing NZ Salmon shareholders.

Newcall officially launched its business in June last year. But while it has yet to turn a profit, its customer base has grown to around 10,000, comprised mostly of small and medium-sized businesses.

The company specialises in long distance and data services and has established a US operation brokering international traffic. From 10 staff, Newcall now employs 60 and recently opened an office in Wellington.

Initiatives such as a joint venture with Power New Zealand in March gave Newcall access to the latter's customer base. Newcall is headed by Norman Nicholls, formerly the managing director of the Telecom Central regional operating company which was disbanded five years ago.