VANGUARD TO INVEST IN AND FORM STRATEGIC ALLIANCE WITH GEOTEK INDUSTRIES, INC.
GREENSBORO, N.C., Nov. 4 /PRNewswire/ -- Vanguard Cellular Systems, Inc. (NASDAQ: VCELA) announced today that it has entered into a letter of intent with Geotek Industries, Inc. (NASDAQ-NMS: GOTK) to invest $30 million in Geotek common shares with options to invest an additional $167 million at various stages over the next three years. Additionally, Vanguard plans to enter into a Management Consulting Agreement to assist Geotek in the rollout of its operational business plan. Under the terms of the letter of intent, Vanguard is to purchase 2.5 million shares of Geotek common stock at $12 per share. Additionally, Vanguard has the option to purchase an additional 10 million shares of Geotek common stock in three separate, linked transactions. Vanguard will have the right to purchase 2 million common shares at $15 per share ("Series A Option") expiring within 12 months from the date of Vanguard's initial investment or the commerical validation of Geotek's proprietary Frequency Hopping Multiple Access digital technology ("FHMA") whichever is later. Vanguard will have the right to purchase an additional 2 million common shares at $16 per share ("Series B Option") expiring within 12 months from the exercise of the Series A Option, the right to purchase 3 million common shares at $17 per share and an additional 3 million common shares at $18 per share both expiring within 12 months from the exercise of the Series B Option ("Series C Option"). Geotek will enter into a five-year management and consulting agreement with Vanguard whereby Vanguard will provide operational and marketing support to Geotek in connection with the build-out and operation if its wireless communication network in the U.S. Under the agreement, Vanguard will receive up to an aggregate of 1.5 million Geotek common shares in consideration for such services. If all options are exercised, Vanguard would own in the aggregate approximately 20 percent of Geotek's common shares on a fully diluted basis. One member of Vanguard's management will join Geotek's Board of Directors at the closing and thereafter Vanguard's board representation will be proportional to its level of ownership. The letter of intent between the two companies is subject to certain contingencies including regulatory approvals, if any, and consumation of a definitive agreement that must be approved by both companies' boards of directors and Geotek's shareholders. Haynes Griffin, Vanguard's president and chief executive officer commented: "We are enthusiastic about Geotek's plans for capitalizing on an innovative technology and marketing approach within the burgeoning wireless communications market in the U.S. and overseas. We believe Vanguard's many years of experience as a cellular operator can play an important role in helping Geotek successfully advance its unique strategies." Yaron Eitan, Geotek's president and CEO said: "The strategic alliance with Vanguard is a major step forward, and Vanguard's proven expertise in operating wireless communications networks servicing over 120,000 subscribers will be of tremendous assistance to Geotek in the operational and marketing activities relating to the rollout of the Geotek network. Vanguard's investment, together with the recent announcement of the Soros organization's $40 million investment will provide susbstantial resources to fund Geotek's anticipated short term capital requirems?." Vanguard Cellular Systems, Inc. owns and operates cellular telephone systems in the eastern United States. Based on its 6.2 million "pops", including pops under contract, Vanguard is the nation's largest independent operator of solely nonwireline cellular systems. Geotek Industries, Inc. is a telecommunications company operating in the field of wireless communications. -0- 11/4/93 /CONTACT: Haynes Griffin, president and CEO, 919-545-2200, or Stephen Leeolou, executive vice president and chief operating officer, 919-545-2206, both of Vanguard Cellular Systems/ (VCELA GOTK)
CO: Vanguard Cellular Systems, Inc.; Geotek Industries, Inc. ST: North Carolina IN: TLS SU:
MM-DF -- CH010 -- 0856 11/04/93 15:15 EST
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|Date:||Nov 4, 1993|
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