Co-operation Agreement with Samsung, etc

BATM Advanced Communications Ld 14 March 2000 Not for Distribution in the United States of America BATM Advanced Communications Ltd ('BATM') Co-operation arrangement with Samsung Electronics Co. Ltd ('Samsung') and discussions with Sun Microsystems Corp ('Sun') Placing of new ordinary shares to raise US$80m Proposed CREST application and 10 for 1 share split Memorandum of understanding with Samsung BATM and Samsung have signed a memorandum of understanding which establishes a framework for the development of a strategic partnership in the broadband transmission and IP switching markets with immediate effect. This co-operation is expected to lead to BATM's VDSL and networking technology being incorporated into Samsung's set top boxes, the sale of enhanced products to Telco's customers and sales of BATM's Titan products to Samsung's customers. Other Research and Development and marketing co-operation centred on BATM's current and planned product offerings and Samsung's extensive and comprehensive ATM offerings is also envisaged under the memorandum. Discussions with Sun Microsystems BATM has been in discussions with Sun Microsystems, Inc. since January 2000 concerning a business relationship. There is no guarantee that these discussions will result in a final agreement. In addition, on January 26, 2000, BATM offered Sun an option to acquire such number of ordinary shares at the then market price (which was £38.13 per share) to raise US$10 million (£6.1m). This option is conditioned on the finalisation of a business agreement between the two companies. Placing As stated in the announcement on 3 February 2000 by BATM of its proposed acquisition of Telco Systems Inc ('Telco'), BATM is raising approximately US$80m (£51m) by way of a placing of new ordinary shares for cash with institutional investors. Approximately US$60.8m (£38.5m) of this will fund part of the US$260.8 (£165.0m) cash consideration for Telco, with the balance providing flexibility for BATM to cover expenses of the Telco transaction and further bolt-on acquisitions such as that of 49.9% of Eldor described below. Dresdner Kleinwort Benson is sole bookrunner for the placing. The book will open with immediate effect and Dresdner Kleinwort Benson reserves the right to close the book at any time. The number of shares to be issued and the issue price will be announced following completion of the Placing. Further information regarding the Telco Acquisition A circular to BATM shareholders, seeking approval for the Telco acquisition is expected to be posted to shareholders shortly. BATM has received clearance from US anti-trust authorities for the Telco acquisition. The Extraordinary General Meeting to approve the transaction is expected to be held on 4 April 2000. Under UK GAAP and BATM accounting policies, Telco's audited turnover in the year to 31 December 1999 was US$105.0m (£66.5m) with operating profit of US$13.3m (£8.4m). Net assets as at 31 December 1999 were US$32.5m (£20.6m). Acquisition of 49.9% of Eldor BATM announced today that is has signed a definitive agreement to acquire 49.9 per cent. of the issued capital of Eldor Machshevim Ltd ('Eldor'), an Israeli information technology services company. The consideration will amount to US$1.3m (£0.8m) payable in cash from BATM's existing resources. In addition, BATM will extend a loan of US$2.5m (£1.6m) to Eldor. In the year ended 31 December 1998, Eldor generated turnover of approximately US$32.5m (£20.6m) and profit before taxation of approximately US$1.73m (£1.1m). As at 31 December 1998, net assets of Eldor amounted to approximately US$(0.6)m (£(0.4)m). Teldor Computer Systems Limited, a listed Israeli company, will retain a 50.1 per cent. holding of Eldor. The Directors believe that the acquisition of the stake in Eldor will enable BATM to offer a broader range of services to existing customers as well as offering the ability to cross sell BATM's existing product range in the Israeli market. Proposed application to CREST and share split Following the announcement on 10 March 2000 by the FTSE Equity Indices Committee that BATM is now eligible, from June 2000, for inclusion in the FTSE UK Indices, the Company intends to seek approval to join CREST. To enable this, a change to the Company's articles of association is required. It is the Board's intention to amend the articles of association, as appropriate, at the Company's next annual general meeting, scheduled for May 2000. It is also the Board's intention to implement a 10 for 1 share split at that time. Further information will be sent to shareholders in due course. Enquiries: www.batm.com BATM 00972 3 938 6888 Dr Zvi Marom (Chief Executive) Ofer Bar-Ner (Finance Director) Dresdner Kleinwort Benson 0207 623 8000 Mark Smith Ludgate Communications 0207 253 2252 Edward Macquisten Kleinwort Benson Limited ('Dresdner Kleinwort Benson'), which is regulated in the UK by The Securities and Futures Authority Limited, is acting exclusively for BATM in connection with the acquisition and no-one else and will not be responsible to anyone other than BATM for providing the protections afforded to customers of Dresdner Kleinwort Benson, or for giving advice in relation to the acquisition.
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