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Company : Pacific Century 
Thursday, August 10, 2000 6:42PM IST (1:12PM GMT)
 
PACIFIC CENTURY CYBERWORKS TO ESTABLISH STRATEGIC ENTRY IN CRITICAL JAPAN MARKET
- Jaleco Acquisition Major Step in Launching Japan Operations -
 
Tokyo, Japan

Pacific Century CyberWorks Limited (PCCW – 1186.HK), the Hong Kong listed technology flagship of Pacific Century Group, and Jaleco Ltd., the Japanese entertainment software producer, today announced a JPY 27 billion (approximately US$250 million) agreement enabling PCCW to acquire a majority share in the listed Japanese company.

Upon completion of the transaction, PCCW, the world's largest new economy company, will acquire approximately 81 percent of the outstanding shares in Jaleco, a publicly traded company governed by the Japanese Securities Dealers Association (JSDA).

The acquisition will involve a "take-over bid" (TOB) and a two-stage third-party allotment. The process will enable PCCW to take control of Jaleco and the third-party allotments will enlarge the total share capital of the company. The capital structure provides maximum flexibility to ensure the future growth of Jaleco as it focuses on broadband Internet content provision.

PCCW intends to nominate directors for election to the Board of Jaleco, assume management control of the company and change its name to Pacific Century CyberWorks Japan (PCCW-Japan). PCCW will invest some 27 billion JPY in Jaleco.

To facilitate PCCW`s entry into the critical Japanese broadband market, three Japanese blue chip companies have agreed to invest in the new company. These strategic Japanese partners are: Dentsu, one of the world's largest advertising agencies; Orix, a leading Japanese financial services company; and PIA, a well established entertainment ticketing service and lifestyle publisher in Japan. In addition, Sony PCL will cooperate in the development of PCCW's NOW (Network of the World) studio for the production of broadband content in Japan.

After acquiring control of Jaleco, PCCW will build on its existing operations to expand the scale and scope of PCCW's business activities in Japan and North Asia. Jaleco will benefit from the acquisition through access to PCCW's broadband content platform, worldwide distribution base and financial strength.

"This acquisition deepens our commitment to Japan and provides a solid anchor for our North Asia operations," said PCCW Chairman and CEO Richard Li. "Acquiring Jaleco is a significant milestone in our global strategy. "

Todd Bonner, the proposed CEO for the new company, said the transaction allows PCCW to expand its Japanese operations and will provide a platform for PCCW's NOW service in Japan and around the world.

"We believe that this will be a mutually beneficial relationship for Jaleco and PCCW, while greatly accelerating our plans to build strategic partnerships with leading Japanese companies," said Bonner, a current PCCW Board Director. "There is huge and largely unmet demand for Japanese content throughout Asia, and PCCW-Japan will provide a gateway to the rest of the region."

Pacific Century CyberWorks provides cutting-edge broadband content combining elements of TV and the Internet through various delivery technologies. PCCW's plan for the Japanese market envisions three mutually reinforcing business units:

NOW Japan. PCCW-Japan will roll out Network of the World (NOW), a converged digital TV-broadband content service. To facilitate this, PCCW-Japan will build a local NOW studio for the creation of Japanese content.

Content Export. Japan's well-known characters and programming have millions of fans throughout the world, especially in Asia. By providing editing and translation services, PCCW-Japan will offer Japanese content through the parent company's worldwide distribution network, allowing Japanese content producers access to large new markets.

Data Center/ASP. PCCW-Japan will offer value-added data center and application services to Japanese corporate clients, leveraging expertise from Hong Kong Telecom and core capabilities in broadband content management and video-streaming.

Welcoming the acquisition, Yoshifumi Mori, Senior Managing Director of Jaleco said, "This acquisition brings with it significant growth potential for Jaleco and for our employees who will have access to new opportunities and challenges. We are looking forward to working with PCCW to bring an exciting variety of new offerings, through both e-commerce and retail distribution, including Internet-based network games."

About PCC
Pacific Century CyberWorks Limited is the technology flagship of Pacific Century Group (www.pcg-group.com), which was founded in 1993. Listed in Hong Kong in August 1999, PCCW is one of the world's largest Internet companies, and is on course to become the world's largest broadband Internet provider. Through strategic investments in more than 50 content, technology and e-commerce providers, PCCW is creating a one-stop-shop for companies to extend their businesses onto the web and to foster rapid growth across the larger Internet economy. PCCW's merger with Cable & Wireless HKT was sanctioned by the High Court of Hong Kong on August 1 and will take effect August 17. The merged company will have a pro-forma revenue this year of about $US 3.5 billion.

About Now
Network of the World is the first truly converged Internet and digital TV content service. Now delivers two services: A linear TV experience and streaming video synchronized to web content. With NOW, TV viewer and Internet users become viewsers, who can drill down into vortals (vertical portals) for in-depth content, including video clips, graphics, animation, text and web links.

About Jaleco
Jaleco develops videogame software for several platforms, including freestanding video arcade machines and popular consumer consoles such as Sony PlayStation and Sega Dreamcast. The company posted total sales for the fiscal year ended March 31, 2000 of ¥6.1billion on a consolidated basis and currently employs 207 people at several locations in the Tokyo area. Approximately 95% of Jaleco's revenues stem from videogame software and related products.

Summary of Transaction
On August 9, 2000, CyberWorks International B.V. (CWIBV), a wholly owned subsidiary of PCCW, Jaleco, and the President and his Wife who are major shareholders of Jaleco signed a basic agreement on the execution of these transactions. Principal terms of the transaction are as follows:

(1) Tender Offer
CWIBV will make the tender offer to acquire all of the shares of Mr. Yoshiaki Kanazawa 5,028,000 shares, all of the shares of Mrs. Setsuko Kanazawa 852,000 shares and 229,000 shares of 1,729,000 shares owned by Kanazawa Kosan. These parties and the company Jaleco have agreed to this tender offer.

(2) First Third Party Allotment
Jaleco will issue 23,118,843 new shares at an issue price of 328 JPY per share on 6th September, 2000 by way of third party allotment, and the new shares will be subscribed by the Subsidiary and 3 strategic investors.

(3) Second Third Party Allotment
Jaleco will issue 60,714,916 new shares at an issue price of 328 JPY per share on 7th November, 2000 by way of third party allotment, and all the new shares will be subscribed by the Subsidiary.

(4) Extraordinary General Meeting of Shareholders
An Extraordinary General Meeting of Shareholders of Jaleco will be held on 30thOctober, 2000 at which the following proposals will be submitted by the Board of Directors.

Change in the corporate name of the Target Company
Change in the objectives of the business
Election of Directors
Increase in Authorized Share Capital
Retirement bonus and other compensation to the President
Addition to the Articles of Association of issuance of stock warrants.
Change in the compensation to directors and auditor

 
Media Contact Details
Pushpa Niar, pushpa@business2media.com, +91-11-3326022
Pushpa Niar, pushpa@business2media.com, +91-11-3326022
 
 
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