VelaTel Secures $12 Million Equity Funding From Ironridge
Proceeds to Close China Motion Acquisition and Fund Growth
SAN DIEGO, Dec. 17, 2012 (GLOBE NEWSWIRE) -- VelaTel Global Communications
(OTCQB:VELA), a leader in deploying and operating wireless broadband and
telecommunication networks worldwide, announced today that it is has closed a
$12 million stock purchase agreement with Ironridge Technology Co., an
institutional investor in the telecommunications sector.
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Proceeds will be used to fund VelaTel's acquisition of China Motion Telecom
(HK) Limited. Ironridge is today initiating payment of $600,000 for the
initial 10% down payment called for under VelaTel's agreement to acquire 100%
of the equity interest of China Motion.VelaTel projects that the remaining
proceeds of Ironridge's equity funding will be sufficient for VelaTel to:
*Pay the remaining balance to acquire China Motion.
*Complete deployment and launch of VelaTel's wireless broadband networks in
Croatia and Montenegro.
*Other strategic purposes on projects under development.
The acquisition of China Motion furthers several of VelaTel's long term
*China Motion's access to wholesale voice and data services using the
wireless network resources of incumbent carriers allows VelaTel to deploy
its projects in mainland China at a fraction of the capital expenditures
*China Motion's experience and personnel in sales and marketing, customer
service and billing solutions provides a platform to serve VelaTel's
wireless broadband networks worldwide.
*The acquisition creates tremendous synergies with VelaTel's Europe based
subsidiary Zapna, which also focusses on long distance and roaming
solutions that cater particularly to the frequent international traveler.
"I am very impressed with the operational experience of China Motion,"
commented Ironridge managing director John Kirkland."We are grateful for the
opportunity to facilitate VelaTel's acquisition of the leading mobile virtual
network operator in Hong Kong, and the synergies it can create for VelaTel in
mainland China, South America and Europe."
Under the Ironridge funding contract, VelaTel will sell Ironridge preferred
shares valued at $10,000 per share, which are convertible into VelaTel's
publicly traded Series A Common Stock at a fixed conversion price of $0.20 per
share.Funding is subject to customary equity conditions and Ironridge is
entitled to non-cumulative dividends and an embedded derivative liability upon
early redemption or conversion as defined in the contract.VelaTel also agreed
to file a customary registration statement to allow resale of the shares upon
"We are very grateful to Ironridge for the continued support they have shown
VelaTel," stated VelaTel's President Colin Tay."Ironridge recently completed
payment of more than $1.3 million to our most important vendors under their
liability for equity (LIFE) program.They have now broadened their support by
not only increasing the size of their investment, but structuring it in a
manner that allows us flexibility to use the proceeds wherever they are needed
most.We also appreciate the efforts of Mr. Luo Hongye, our lead partner in
China as CEO of our VN Tech division and a co-founder of ZTE Corporation.Mr.
Luo, as a leader in the telecom and green energy fields in China, was
instrumental in bringing VelaTel and Ironridge together in this transaction."
About VelaTel Global Communications, Inc.
VelaTel acquires spectrum assets through acquisition or joint venture
relationships, and provides capital, engineering, architectural and
construction services related to the build-out of wireless broadband
telecommunications networks, which it then operates by offering services
attractive to residential, enterprise and government subscribers. VelaTel
currently focuses on emerging markets where internet penetration rate is low
relative to the capacity of incumbent operators to provide comparable cutting
edge services, and/or where the entry cost to acquire spectrum is low relative
to projected subscribers. VelaTel currently has project operations in People's
Republic of China, Croatia, Montenegro and Peru. Additional target markets
include countries in Latin America, the Caribbean, Southeast Asia and Eastern
Europe. VelaTel's administrative headquarters are in Carlsbad, California. For
more information, please visit www.velatel.com.
The VelaTel Global Communications logo is available at
About Ironridge Technology Co.
Ironridge Technology Co. is a division of Ironridge Global IV, Ltd. that
specializes in direct equity investments in telecommunications, electronics,
computer, and technology companies.Ironridge Global is an institutional
investor, making direct equity investments in small cap public companies.The
firm seeks to be a long-term financial partner, assisting public companies in
financing operations and expansion by supplying innovative funding solutions
and flexible capital.The firm does not desire to influence or control
management, will not restrict use of proceeds, requires no restrictive
covenants, and will never take an affiliate or control position. Ironridge
Global exclusively places its trust in current management with a strong vision
for accelerated growth and increased shareholder value.For more information
on Ironridge Global, please visit www.IronridgeGlobal.com.
The Ironridge Technology Co. logo is available at
Matters discussed in this press release contain forward-looking statements
involving known and unknown risks, uncertainties and other factors that could
cause the Company's actual operating results to be materially different from
any historical results or from any future results expressed or implied by such
forward-looking statements.Readers are urged to consider statements that
contain terms such as "may," "will," "should," "believe," "expect," "project,"
"intend," "anticipate," "plan," or "estimate" to be forward-looking.
Forward-looking statements are also subject to risks and uncertainties that
are described in the Company's most recent annual report on Form 10-K under
the heading "Risk Factors" and our subsequent filings with the Securities and
Exchange Commission. We do not undertake any obligation to publicly update any
forward-looking statements, whether as a result of the receipt of new
information, future events, or otherwise. You should independently
investigate and fully understand all risks before making an investment
CONTACT: VelaTel Global Communications, Inc.
(Toll Free) 1-877-260-9170
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