British
Virgin Islands
|
7310
|
Not
applicable
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
standard industrial
classification
code number)
|
(I.R.S.
Employer
Identification
Number)
|
Barbara
A. Jones, Esq.
|
Jose
Santos
|
Peter
J. Rooney, Esq.
|
Maples
and Calder
|
McDermott
Will & Emery LLP
|
Sea
Meadow House
|
340
Madison Avenue
|
Road
Town, Tortola
|
New
York, New York 10173-1922
|
British
Virgin Islands VG1110
|
(212)
547-5443
|
(284)
852-3000
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o (Do not check if
a smaller
reporting
company)
|
Smaller
Reporting Company x
|
/s/ Robert A.
Schriesheim
|
|
Robert
A. Schriesheim
|
|
Chairman
of the Board of Directors of
|
|
Alyst
Acquisition Corp.
|
|
(a)
|
The
redomestication of Alyst from the State of Delaware to the British Virgin
Islands by merging Alyst with and into China Networks International
Holdings Ltd. (‘‘CN Holdings’’), its wholly-owned British Virgin Islands
subsidiary (the ‘‘Redomestication Merger’’), in conjunction with the
acquisition of China Networks Media, Ltd. (“China Networks Media”), a
private British Virgin Islands company with limited liability, as set out
in paragraph (b) below. This proposal is called the ‘‘Redomestication
Proposal” and is conditioned upon approval of the Business Combination
Proposal discussed in paragraph (b)
below.
|
|
(b)
|
The
proposed merger of China Networks Merger Co., Ltd., a wholly-owned British
Virgin Islands subsidiary of CN Holdings (“China Networks Merger Co.”),
with and into China Networks Media, resulting in China Networks Media
becoming a wholly-owned subsidiary of CN Holdings (the ‘‘Business
Combination’’), and the related transactions contemplated by the Agreement
and Plan of Merger, dated August 13, 2008, by and among Alyst, China
Networks Media, CN Holdings, China Networks Merger Co., Ltd., Mr. Li
Shuangqing, Kerry Propper and MediaInv Ltd. (the ‘‘Merger Agreement’’).
This proposal is called the ‘‘Business Combination Proposal” and is
conditioned upon approval of the Redomestication Proposal discussed in
paragraph (a) above.
|
|
(c)
|
The
2008 Omnibus Securities and Incentive Plan pursuant to which directors,
officers, employees and consultants of CN Holdings or its subsidiaries may
be granted options to purchase up to 2,500,000 million ordinary shares of
CN Holdings. This proposal is called the “Share Incentive Plan
Proposal.”
|
|
(d)
|
Any
adjournment or postponement of the Special Meeting for the purpose of
soliciting additional proxies in the event Alyst does not receive the
requisite stockholder vote for approval of the Redomestication Proposal
and the Business Combination Proposal. This proposal is called the
‘‘Adjournment and
Postponement.’’
|
Dated: June ●, 2009
|
|
By
Order of the Board of Directors,
|
|
/s/ Robert A. Schriesheim | |
Robert
A. Schriesheim
|
|
Chairman
|
Page
|
|
SUMMARY
|
1
|
RISK
FACTORS
|
11
|
SELECTED
SUMMARY HISTORICAL FINANCIAL INFORMATION
|
27
|
PRO
FORMA FINANCIAL INFORMATION
|
31 |
COMPARATIVE
PER SHARE DATA
|
42
|
THE
ALYST SPECIAL MEETING
|
45
|
THE
BUSINESS COMBINATION PROPOSAL
|
50
|
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
|
66
|
THE
REDOMESTICATION PROPOSAL
|
74
|
THE
SHARE INCENTIVE PLAN PROPOSAL
|
84
|
PROPOSAL
TO ADJOURN OR POSTPONE THE SPECIAL MEETING FOR THE PURPOSE OF
SOLICITING ADDITIONAL PROXIES
|
88
|
INFORMATION
ABOUT CHINA NETWORKS MEDIA
|
89
|
CHINA
NETWORKS MEDIA’S
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
102
|
INFORMATION
ABOUT ALYST
|
124
|
ALYST
MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION
|
126
|
DIRECTORS
AND MANAGEMENT
|
128
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
134
|
BENEFICIAL
OWNERSHIP OF SECURITIES
|
136
|
SHARES
ELIGIBLE FOR FUTURE SALE
|
141
|
DESCRIPTION
OF ALYST’S SECURITIES
|
142
|
DESCRIPTION
OF CN HOLDINGS’ SECURITIES
FOLLOWING THE BUSINESS COMBINATION
|
142
|
TRANSFER
AGENT AND REGISTRAR
|
147
|
STOCKHOLDER
PROPOSALS
|
147
|
LEGAL
MATTERS
|
147
|
EXPERTS
|
147
|
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS
|
148
|
WHERE
YOU CAN FIND MORE INFORMATION
|
149
|
INDEX
TO FINANCIAL STATEMENTS
|
F-1
|
|
·
|
The
parties to the Merger Agreement are Alyst, China Networks Media, CN
Holdings, China Networks Merger Co., Mr. Li Shuangqing, MediaInv Ltd., and
Kerry Propper. See the section entitled “The Business Combination
Proposal.”
|
|
·
|
Alyst
will merge with and into CN Holdings, Alyst’s
wholly-owned subsidiary incorporated in the British Virgin Islands, or
BVI, resulting in CN Holdings as the surviving corporation, for the
purpose of redomesticating Alyst from the State of Delaware to the BVI as
part of the acquisition of China Networks Media in the Business
Combination. See the section entitled “The Redomestication Proposal.”
|
|
·
|
In
connection with the Redomestication Merger, all of Alyst’s issued and
outstanding securities immediately prior to the Redomestication Merger
will be converted into securities of CN Holdings as set forth in the
Merger Agreement. See the section entitled “The Business Combination
Proposal – Terms of the Merger Agreement – Basic Deal
Terms.”
|
|
·
|
China
Networks Merger Co., a company incorporated in the BVI and a wholly-owned
subsidiary of CN Holdings, will merge with and into China Networks Media,
whereupon China Networks Media will be the surviving entity and the
wholly-owned subsidiary of CN Holdings. See the section entitled “The
Business Combination Proposal.”
|
|
·
|
In
connection with the Business Combination, each ordinary share of China
Networks Media issued and outstanding prior to the business combination
will be converted automatically into one ordinary share of CN Holdings and
each class A preferred share of China Networks Media outstanding
immediately prior to the business combination will be converted into one
ordinary share of CN Holdings. See the section entitled “The Business
Combination Proposal – Terms of the Merger Agreement – Basic Deal
Terms.”
|
·
|
The
current market value of the aggregate maximum merger consideration payable
to China Networks Media in the Business Combination is approximately
$137,180,000, based upon the closing price of Alyst’s common
stock on the NYSE Amex on May 8, 2009 of $7.75 per
share. CN Holdings will issue to China Networks Media’s
shareholders aggregate merger consideration of (i) 2,880,000 CN Holdings
ordinary shares (with a current market value of $22,320,000), (ii) an
aggregate of $17,000,000 in cash, (iii) deferred cash payments of up to
$6,000,000 and deferred share payments of up to 9,000,000 ordinary shares
of CN Holdings, in each case subject to the achievement of specified
financial milestones set forth in the Merger Agreement, and (iv)
$22,110,000 of proceeds from the exercise of CN Holdings
warrants. The deferred cash and deferred stock consideration
will be payable as follows: (x) $3,000,000 cash and 2,850,000 shares of
stock upon China Networks Media achieving pro forma net income for fiscal
year 2009 of greater than $20,000,000; (y) $3,000,000 cash and 3,075,000
shares of stock upon China Networks Media achieving pro forma
net income for fiscal year 2010 of greater than $30,000,000; and (z)
3,075,000 shares of stock upon China Networks Media achieving pro forma
net income for fiscal year 2011 of greater than $40,000,000. The
pro forma net income of China Networks Media is calculated by determining
the net income of China Networks Media in accordance with U.S. generally
accepted accounting principles (“GAAP”), but excluding (i) equity-based
compensation charges, (ii) extraordinary one-time charges, and (iii)
charges related to the Business Combination or impairment of goodwill; and
including the net income generated by acquired businesses or persons only
to the extent that such acquisitions are accretive on a net income per
share basis. In addition, if acquisitions are included in the
calculation of pro forma net income for any year, the calculation will
assume that all such acquisitions occurred on the first day of such
year.
|
|
·
|
China
Networks Media is a venture provider of broadcast television services in
the People’s Republic
of China, or PRC, operating in partnership with a local state-owned
enterprise authorized by the PRC government to control the distribution of
broadcast TV services. See the section entitled “Information about China
Networks Media.”
|
|
·
|
The
closing of the acquisition of China Networks Media is subject to the
satisfaction by each party of various conditions prior to closing. See the
section entitled “The Business Combination Proposal – Terms of the
Merger Agreement – Closing
Conditions.”
|
|
·
|
The
Business Combination will not be consummated unless the Redomestication
Proposal is approved, and the Redomestication Merger will not be
consummated unless the Business Combination Proposal is approved. See the
section entitled “The Alyst Special Meeting – Vote
Required.”
|
|
·
|
Stockholders
are also being asked to approve the 2008 Omnibus Securities and
Incentive Plan pursuant to which directors, officers, employees and
consultants of the surviving corporation, CN Holdings, or its subsidiaries
may be granted options to purchase up to 2,500,000 ordinary shares of CN
Holdings. See the section entitled “The Share
Incentive Plan Proposal.”
|
Q.
What is being voted on?
|
A.
You are being asked to vote on four proposals:
|
|
· The merger of Alyst
with and into its wholly-owned British Virgin Islands (“BVI”) subsidiary,
CN Holdings, for the purpose of redomesticating Alyst to the BVI and
increasing the authorized share capital to accommodate the Business
Combination. This proposal is called the ‘‘Redomestication Merger
Proposal.’’
|
||
· The proposed merger
of CN Holdings’ wholly-owned subsidiary, China Networks Merger Co., with
and into China Networks Media, resulting in China Networks Media becoming
a wholly-owned subsidiary of CN Holdings. This proposal is called the
‘‘Business Combination Proposal.’’
|
||
|
||
· The approval of the
2008 Omnibus Securities and Incentive Plan pursuant to which directors,
officers, employees and consultants of the surviving corporation, CN
Holdings, or its subsidiaries may be granted up to 2.5 million ordinary
shares of CN Holdings. This proposal is called the “Share Incentive Plan
Proposal.”
|
||
· The approval of any
adjournment or postponement of the Special Meeting for the purpose of
soliciting additional proxies. This proposal is called the ‘‘Adjournment
and Postponement Proposal.’’
|
||
Q.
Why are stockholders of Alyst being asked to approve actions that will be
taken by CN Holdings?
|
A.
Alyst stockholders are being asked to approve the entry into the Business
Combination by CN Holdings. The Memorandum and Articles of Association of
CN Holdings will include protective provisions identical in substance to
those contained in Alyst’s amended and restated certificate of
incorporation at the time of its IPO, although CN Holdings will have a
perpetual, rather than limited, existence and its authorized share capital
will increase to 75 million ordinary shares (compared to 30 million common
and 1 million preferred shares for Alyst). As a result, immediately
following the completion of the Redomestication Merger, the constitutional
documents of CN Holdings will require that the majority of the shares
issued in Alyst’s IPO approve its Business Combination with China Networks
Media, as well as the Share Incentive Plan Proposal. Since the laws of the
BVI also require the affirmative vote of a majority of the shares of China
Networks Media and China Network Merger Co., the shareholders of each such
corporation will be approving such actions by written consent, effective
upon receipt of corresponding approval of Alyst’s stockholders. Such
action by written consent, together with the approval by Alyst’s
stockholders at the Special Meeting, will be effective under BVI law and
CN Holdings’ amended constitutional
documents.
|
|
Q.
Who is entitled to vote?
|
A.
Holders of Alyst’s outstanding common stock as of the close of business on
·, 2009, (the “Record Date”) are entitled to vote on all proposals at the
Special Meeting by proxy or in person.
|
|
Q.
What vote is required to approve the Redomestication Merger
Proposal?
|
A.
Approval of the Redomestication Merger Proposal will require the
affirmative vote of a majority of the outstanding shares of Alyst’s common
stock as of the Record Date, provided there is a quorum and that the
Business Combination is also approved.
|
|
Q.
What vote is required to approve the Business Combination
Proposal?
|
A.
The approval of the Business Combination requires the affirmative vote of
a majority of the outstanding shares of common stock present in person or
by proxy and entitled to vote at the Special Meeting, including the
affirmative vote of a majority of the shares of common stock issued in the
IPO present, in person or by proxy and entitled to vote at the Special
Meeting, provided that there is a quorum. Alyst’s initial stockholders
have agreed to vote their 1,750,000 shares acquired prior to the IPO and
as part of the insider units sold simultaneously with the consummation of
the IPO in accordance with the holders of a majority of the public shares
voting in person or by proxy at the meeting. Any other shares that may be
acquired by Alyst’s initial stockholders prior to the record date may be
voted in any manner that they choose. Alyst’s initial stockholders have
not acquired any additional shares of common stock entitled to vote beyond
their initial shares.
If
the stockholders approve the Business Combination, the Business
Combination will only proceed if holders of less than 30% of the shares of
common stock sold in Alyst’s IPO exercise their conversion rights and vote
against the Business Combination. If the holders of 2,413,320 or more
shares purchased in Alyst’s IPO vote against the Business Combination and
demand that Alyst convert their shares into their pro rata portion of the
trust account established at the time of the IPO (as described below),
Alyst will not be permitted to consummate the Business Combination
pursuant to its amended and restated certificate of
incorporation.
|
Q.
What vote is required to approve the Share Incentive Plan Proposal?
|
A.
Approval of the Share Incentive Plan Proposal will require the affirmative
vote of a majority of the outstanding shares of Alyst’s common stock
represented in person or by proxy and entitled to vote at the Special
Meeting, provided there is a quorum. Approval of this Proposal is not a
condition to approval of the Business Combination Proposal or
Redomestication Proposal.
|
|
Q.
What vote is required to adopt the proposal to adjourn or postpone the
Special Meeting for the purpose of soliciting additional
proxies?
|
A.
Approval of the Adjournment and Postponement Proposal will require the
affirmative vote of holders of a majority of the shares of Alyst’s common
stock represented in person or by proxy and entitled to vote at the
Special Meeting, provided there is a quorum.
|
|
Q.
Do Alyst stockholders have appraisal rights under Delaware
law?
|
A.
The Alyst stockholders do not have appraisal rights under Delaware
corporate law in connection with either the Redomestication Merger or the
Business Combination.
|
|
Q.
How will the Redomestication Merger be accomplished?
|
A.
Alyst will merge into CN Holdings, Alyst’s wholly - owned subsidiary that
is incorporated as a BVI company. As a result of the Redomestication
Merger, each currently issued outstanding security of Alyst will
automatically convert into one corresponding security of CN Holdings. This
procedure will result in your becoming a securityholder in CN Holdings
instead of Alyst.
|
|
Q.
What happens post-Business Combination to the funds deposited in the trust
account?
|
A.
Alyst stockholders exercising conversion rights will receive their pro
rata portion of the trust account. The balance of the funds in the trust
account will be released to CN Holdings and will be utilized to pay to the
former shareholders of China Networks Media the cash portion of the merger
consideration in the amount of $17 million, and any remaining funds will
be retained by CN Holdings to make payments aggregating $13.6 million to
the PRC TV Stations (as defined below under “The Companies”) and
approximately $2 million in transaction expenses and commissions due on
closing and for operating capital subsequent to the closing of the
Business Combination.
|
|
Q.
What happens if the Business Combination and Redomestication Merger are
not consummated?
|
A.
If Alyst does not redomesticate and acquire China Networks Media in the
Business Combination, Alyst may seek an alternative business combination.
However, under its amended and restated certificate of
incorporation, if Alyst does not acquire at least majority control of
a target business by June 29, 2009, Alyst must dissolve and distribute to
its public stockholders the amount in the trust account plus any remaining
net assets. Following dissolution, Alyst would no longer exist as a
corporation.
In
any liquidation, the funds held in the trust account, plus any interest
earned thereon (net of taxes payable), together with any remaining
out-of-trust net assets, will be distributed pro rata to Alyst’s common
stockholders who hold shares issued in Alyst’s IPO (other than the initial
stockholders, each of whom has waived any right to any liquidation
distribution with respect to them). See the risk factor on page 26 of
this proxy statement/prospectus relating to risks associated with the
dissolution of
Alyst.
|
Q.
Do Alyst stockholders have conversion rights?
|
A.
If you hold shares of common stock issued in Alyst’s IPO, then you have
the right to vote against the Business Combination Proposal and demand
that Alyst convert these shares into a pro rata portion of the trust
account in which a substantial portion of the net proceeds of Alyst’s IPO
are held. These rights to vote against the Business Combination and demand
conversion of the shares into a pro rata portion of the trust account are
sometimes referred to herein as conversion rights. Holders of warrants
issued by Alyst do not have any conversion rights. Pursuant to the
arrangements established at the time of Alyst’s IPO, shareholders of Alyst
representing 30% less one share of the outstanding shares issued in
Alyst’s IPO may exercise conversion rights in the event they vote against
the Business Combination.
|
|
SIMPLY
VOTING AGAINST THE BUSINESS COMBINATION OR CHECKING THE ‘‘EXERCISE
CONVERSION RIGHTS’’ BOX ON A PROXY CARD DOES NOT PERFECT YOUR CONVERSION
RIGHTS – YOU MUST ALSO SEND ALYST THE WRITTEN DEMAND LETTER DESCRIBED
UNDER “THE ALYST SPECIAL MEETING – CONVERSION
RIGHTS.”
|
||
Q.
Will the Alyst stockholders be taxed as a result of the Redomestication
Merger?
|
A. It
is anticipated that Alyst stockholders or warrant holders generally should
not recognize gain or loss as a result of the Redomestication Merger for
U.S. federal income tax purposes. We urge you to consult your own tax
advisors with regard to the particular tax consequences to you of the
Redomestication Merger.
|
|
Q.
Will Alyst be taxed on the Redomestication Merger?
|
A.
It is anticipated that for U.S. federal income tax purposes, as to each of
its assets, Alyst will recognize gain (but not loss) realized as a result
of the Redomestication Merger in an amount equal to the excess (if any) of
the fair market value of such asset over such asset’s adjusted tax basis
at the effective time of the Redomestication Merger. Any U.S. federal
income tax liability incurred by Alyst as a result of the recognition of
such gain should become a liability of CN Holdings by reason of the
Redomestication Merger.
|
|
Q.
If I am not going to attend the Special Meeting in person, should I return
my proxy card instead?
|
A.
Yes. After carefully reading and considering the information in this proxy
statement/prospectus, please fill out and sign your proxy card. Then
return it in the return envelope as soon as possible, so that your shares
may be represented at the Special Meeting. You may also vote by telephone,
as explained on the proxy card. A properly executed proxy will be counted
for the purpose of determining the existence of a
quorum.
|
|
Q.
If I have conversion rights, how do I exercise them?
|
A.
If you wish to exercise your conversion rights, you must vote against the
Business Combination Proposal in person, by submitting a proxy card, or by
telephone, and at the same time send a written demand that Alyst convert
your shares for cash. In addition, prior to the Special Meeting, you must
deliver your shares to the transfer agent in the manner described below.
If, notwithstanding your vote, the Business Combination is completed, then
you will be entitled to receive a pro rata portion of the trust account,
including any interest earned thereon through the record date. You will be
entitled to convert each share of common stock that you hold for
approximately $7.85. If you exercise your conversion rights, then you will
be converting your shares of Alyst common stock for cash and will no
longer own these shares. You will be entitled to receive cash for these
shares only if you tender your stock certificate to our transfer agent,
Continental Stock Transfer & Trust Company, at any time prior to the
conclusion of the vote on the Business Combination. Alternatively, you may
deliver your shares to the transfer agent electronically prior to the
Special Meeting, at a nominal cost, using the Depository Trust Company’s
DWAC System. If you do not make a written demand to exercise your
conversion rights prior to the Special Meeting (or if you do not vote
against the Business Combination Proposal and tender your shares to the
transfer agent prior to the vote), you will lose your conversion rights,
and that loss cannot be remedied.
|
Q.
How do I withdraw my request for conversion?
|
A.
You may withdraw a request for conversion of your shares any time prior to
the date of the Special Meeting by requesting that the transfer agent
return your share certificate(s) either physically or
electronically.
|
|
Q.
What will happen if I abstain from voting or fail to instruct my broker to
vote?
|
A.
An abstention or the failure to instruct your broker how to vote (also
known as a broker non-vote) is not considered a vote cast at the meeting
with respect to the Business Combination Proposal. Therefore your vote
will have no effect on the vote relating to the Business Combination, and
you will not be able to convert your shares into a pro rata
portion of the trust account. An abstention or failure to vote will have
the effect of voting against the Redomestication Merger Proposal and the
Share Incentive Plan Proposal.
|
|
Q.
If
my shares are held in “street name,” will my broker automatically vote
them for me?
|
A.
No. Your broker can vote your shares only if you provide instructions on
how to vote. You should instruct your broker to vote your
shares. Your broker can tell you how to provide these
instructions.
|
|
|
||
Q.
How do I change my vote?
|
A.
You may send a later-dated, signed proxy card to Alyst’s secretary no
later than June ●, 2009, prior to the date of the Special Meeting, or
attend the Special Meeting in person and vote. You also may revoke your
proxy no later than June ●, 2009 by sending a notice of revocation to
Michael Weksel, Alyst Acquisition Corp., 233 E. 69th Street, #6J, New
York, New York 10021.
|
|
Q.
Do I need to turn in my old certificates?
|
A.
If you wish to exercise your conversion rights, you must tender your
shares to the transfer agent prior to the Special Meeting. If
the Business Combination Proposal is approved and you hold your securities
in Alyst in certificate form, as opposed to holding them through your
broker, you do not need to exchange them for certificates issued by CN
Holdings. Your current certificates will represent your rights in CN
Holdings. You may exchange them by contacting the transfer agent,
Continental Stock Transfer & Trust Company, Reorganization Department,
and following their requirements for reissuance.
|
|
Q.
Who can help answer my questions?
|
A.
If you have questions, you may write or call Alyst Acquisition Corp., at
233 E. 69th Street, #6J, New York, New York 10021, (646) 290-6104,
Attention: Michael Weksel.
|
|
Q.
When and where will the Special Meeting be held?
|
A.
The meeting will be held at 10:00 a.m. Eastern time on June ●, 2009 at 340
Madison Avenue, 2nd Floor, New York, New York.
|
|
·
|
If the proposed Business
Combination is not completed, and Alyst is unable to complete another
acquisition by June 29, 2009, Alyst will be required to liquidate. Upon
liquidation, the shares of common stock owned by Alyst’s directors will be
worthless because the shares will no longer have any value and the
directors are not entitled to liquidation distributions from Alyst. In
addition, the possibility that Alyst’s officers and directors will be
required to perform their obligations under the indemnity agreements
referred to below will be substantially
increased.
|
|
·
|
In connection with Alyst’s IPO,
Alyst’s current officers and directors agreed to indemnify Alyst for debts
and obligations to vendors that are owed money by Alyst for services
rendered or products sold to Alyst, but only to the extent necessary to
ensure that certain liabilities do not reduce funds in the trust account.
If the Business Combination is consummated, Alyst’s officers and directors
will not have to perform such obligations. If the Business Combination is
not consummated, however, Alyst’s officers and directors could potentially
be liable for any claims against the trust account by vendors who did not
sign waivers.
|
|
·
|
All rights of Alyst’s officers
and directors to be indemnified by Alyst, and of Alyst’s directors to be
exculpated from monetary liability with respect to prior acts or
omissions, will continue after the Business Combination pursuant to
provisions in CN Holdings’ Amended and Restated Memorandum and Articles of
Association, forms of which are attached hereto as Annexes D and E,
respectively. However, if the Business Combination is not approved and
Alyst subsequently liquidates, its ability to perform its obligations
under those provisions will be substantially impaired since it will cease
to exist. If the Business Combination is ultimately completed, CN
Holdings’ ability to perform such obligations will be substantially
enhanced.
|
|
·
|
It is anticipated that China
Networks Media’s current Chief Executive Officer, Li Shuangqing, will
enter into an employment agreement with CN Holdings as a condition to the
consummation of the Merger Agreement, although such condition may be
waived by the parties. The employment agreement must be approved by a
majority of the independent directors of CN Holdings’ Board of
Directors.
|
|
·
|
Under the Share Incentive Plan,
as proposed, directors of CN Holdings’ Board of Directors may be granted
options to purchase shares of CN Holdings. Under the Merger
Agreement, Alyst is entitled to appoint three directors to the post-merger
CN Holdings’ Board of Directors, who will be entitled to receive shares or
option grants under the
Plan.
|
|
·
|
It is expected that three of the
current directors of Alyst, including Michael Weksel, will serve as
directors of CN Holdings if the Business Combination is
consummated.
|
|
·
|
Michael Weksel entered into an
employment agreement in January 2009 with China Networks Media to serve as
its Chief Financial Officer, a role that is expected to continue if the
Business Combination is consummated. The employment agreement
provides that Mr. Weksel may continue in his current obligations to Alyst
until such time as the Business Combination is consummated or Alyst is
dissolved. Mr. Weksel receives no salary from Alyst, but for
the period prior to the earlier of the consummation of the Business
Combination or June 29, 2009 (the “Initial Term”), is entitled to receive
from China Networks Media, a base salary equal to $180,000 per
annum. Such base salary will increase to $360,000 after the
Initial Term. Mr. Weksel is also entitled to receive a bonus of
$360,000 if China Networks Media achieves the net income targets for 2009
and 2010 set out in the Merger Agreement. In addition, if the
Merger Agreement is consummated, Mr. Weksel will receive a 7-year
non-qualified option under the Share Incentive Plan for the purchase of
500,000 ordinary shares of CN Holdings, subject to certain adjustments,
50,000 of which shall vest immediately upon issuance of the
option. The balance of the entitlement under the option shall
vest over a 36-month
period.
|
|
·
|
Warrants to purchase Alyst
common stock held by Alyst’s directors and officers are
exercisable 90 days after consummation of the Business
Combination. Based upon the closing price of Alyst’s common stock
on May 8, 2009 of $7.75, if all warrants held by Alyst’s directors
and officers were exercised for common stock the value of such shares of
common stock would be approximately
$14,105,000.
|
|
·
|
Michael Weksel has entered
into a Put-Call Option Agreement with Alyst pursuant to which (i) Alyst
has the right to purchase from Mr. Weksel up to 559,794 of Alyst’s
publicly traded warrants (the “Warrants”) at a price of $0.0446 per
warrant (the “Exercise Price”) at any time through August 31, 2009 and
(ii) Mr. Weksel has the right at any time after June 29, 2009 and before
August 31, 2009 to sell such warrants to Alyst at the Exercise
Price. The Warrants were purchased by Mr. Weksel in open market
transactions at a price equal to the Exercise Price in order to
enhance Alyst’s ability to enter into arrangements with
stockholders or third parties to facilitate consummation of the Business
Combination without altering Alyst’s existing capital structure. If
the Business Combination is not consummated and Alyst is forced to
liquidate, the Warrants would have no value in the open
market.
|
|
·
|
radio,
|
|
·
|
newspapers,
|
|
·
|
magazines,
|
|
·
|
the
Internet,
|
|
·
|
indoor
or outdoor flat panel displays,
|
|
·
|
billboards
and
|
|
·
|
public
transport advertising.
|
|
·
|
develop
new customers or new business from existing
customers;
|
|
·
|
expand
the technical sophistication of the products it
offers;
|
|
·
|
respond
effectively to competitive pressures;
and
|
|
·
|
attract
and retain qualified management and
employees.
|
|
·
|
China
Networks Media has no track record in obtaining advertisement resources
from other regional television
networks;
|
|
·
|
There
is expected to be intense competition from advertising companies that are
already well-established in those
markets;
|
|
·
|
China
Networks Media may not be able to accurately assess and adjust to the
consumer tastes, preferences and demands in the relevant regional markets;
and
|
|
·
|
It
may not be possible to generate enough revenue to offset
costs.
|
|
·
|
investors’
perception of, and demand for, its
securities;
|
|
·
|
prevailing
conditions in the global financial and capital markets in
which it will seek to raise funds;
|
|
·
|
the
future results of operations, financial condition and cash flows of China
Networks Media;
|
|
·
|
PRC
governmental regulation of foreign investment in advertising companies in
China;
|
|
·
|
PRC
governmental policies relating to foreign exchange;
and
|
|
·
|
economic,
political and other conditions in
China.
|
|
·
|
fines,
|
|
·
|
confiscation
of advertising fees,
|
|
·
|
orders
to cease disseminating the advertisements
and
|
|
·
|
orders
to publish public announcements to correct the misleading
information.
|
|
·
|
may
be subject to liability for infringement activities or may be prohibited
from using such intellectual
property,
|
|
·
|
may
incur licensing fees or be forced to develop
alternatives.
|
|
·
|
may
incur significant expenses, and
|
|
·
|
may
be forced to divert management’s time and other resources from its
business and operations to defend against these third-party infringement
claims, regardless of their merits.
|
|
·
|
take
appropriate remedial action,
|
|
·
|
confiscate
any illegal income and
|
|
·
|
impose
a fine in the event of a contravention of the new
regulation.
|
|
·
|
the
desirability of time slots it offers on the relevant PRC TV
Stations,
|
|
·
|
the
extent of television network coverage
provided,
|
|
·
|
the
service packages and pricing structure offered
and
|
|
·
|
the
client’s
perception of the effectiveness and quality of its
services.
|
|
·
|
ANT
may not be able to take control of Hetong upon the occurrence of certain
events, such as the imposition of statutory liens, judgments, court
orders, death or incapacity.
|
|
·
|
If
the PRC government proposes new laws or amends current laws that are
detrimental to the contractual agreements with Hetong, such changes may
effectively eliminate China Networks Media’s
control over the Hetong and its ability to consolidate the JV Tech Cos and
the JV Ad Cos.
|
|
·
|
If
the shareholders of Hetong fail to perform as required under those
contractual agreements, ANT will have to rely on the PRC legal system to
enforce those agreements and there is no guarantee that it will be
successful in an enforcement
action.
|
|
·
|
levying
fines;
|
|
·
|
confiscating
income; and/or
|
|
·
|
requiring
a restructuring of ownership or operations.
|
|
·
|
levying
fines,
|
|
·
|
confiscating
its income,
|
|
·
|
revoking
the business licenses or operating licenses of its PRC affiliates and PRC
TV Stations,
|
|
·
|
requiring
China Networks Media to restructure the relevant ownership structure or
operations, and
|
|
·
|
requiring
it to discontinue all or any portion of its
operations.
|
|
·
|
Such
company would be subject to PRC enterprise income tax at a rate of 25
percent (the “EIT”)
on its worldwide income;
|
|
·
|
Such
company would be liable for the EIT on dividends it receives from
subsidiaries unless such company is a “qualifying resident enterprise” and
the dividend it receives is attributable to direct investment in another
“qualifying resident enterprise” that is paying the dividend (it is
unclear whether CN Holdings or China Networks Media would qualify as a
“qualifying resident enterprise” in light of uncertainties of
interpretation and lack of official
guidance);
|
|
·
|
Such
company may be required to withhold a 10 percent PRC withholding tax on
dividends it pays to non-resident enterprise shareholders (subject to
possible reduction under an applicable income tax treaty); and
|
|
·
|
Gains
derived by non-resident enterprise shareholders upon disposition of shares
of such company may be subject to a 10 percent PRC withholding tax
(subject to possible reduction under an applicable income tax treaty).
|
|
·
|
the
U.S. court issuing the judgment had jurisdiction in the matter and the
company either submitted to such jurisdiction or was resident or carrying
on business within such jurisdiction and was duly served with
process;
|
|
·
|
the
judgment given by the U.S. court was not in respect of penalties, taxes,
fines or similar fiscal or revenue obligations of the
company;
|
|
·
|
in
obtaining judgment there was no fraud on the part of the person in whose
favor judgment was given or on the part of the
court;
|
|
·
|
recognition
or enforcement of the judgment in the BVI would not be contrary to public
policy; and
|
|
·
|
the
proceedings pursuant to which judgment was obtained were not contrary to
natural justice.
|
|
·
|
an
act complained of which is outside the scope of the authorized business or
is illegal or not capable of ratification by the
majority,
|
|
·
|
acts
that constitute fraud on the minority where the wrongdoers control the
company,
|
|
·
|
acts
that infringe on the personal rights of the shareholders, such as the
right to vote, and
|
|
·
|
where
the company has not complied with provisions requiring approval of a
special or extraordinary majority of shareholders, which are more limited
than the rights afforded minority stockholders under the laws of many
states in the United States.
|
|
·
|
actual
or anticipated fluctuations in quarterly and annual results;
|
|
·
|
limited
operating history;
|
|
·
|
mergers
and strategic alliances in the television industry in
China;
|
|
·
|
market
conditions in the industry;
|
|
·
|
changes
in U.S. or Chinese government
regulation;
|
|
·
|
fluctuations
in CN Holdings’ revenues and earnings and those of its
competitors;
|
|
·
|
shortfalls
in CN Holdings’ operating results from levels forecasted by securities
analysts;
|
|
·
|
announcements
covering CN Holdings or its competitors; and
|
|
·
|
the
general state of the financial and capital markets.
|
|
·
|
To
exercise the warrants and pay the exercise price for such warrants at a
time when it may be disadvantageous for the holders to do
so;
|
|
·
|
To
sell the warrants at the then current market price when they might
otherwise wish to hold the warrants; or
|
|
·
|
To
accept the nominal redemption price which, at the time the warrants are
called for redemption, is likely to be substantially less than the market
value of the warrants.
|
For the nine
months ended
March 31, 2009
|
For the three
months ended
March 31, 2009
|
For the year ended
June 30, 2008
|
For the period
from August 16,
2006 (inception)
through March 31,
2009
|
For the period
from August 16,
2006 (inception)
through June 30,
2008
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Revenue
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Formation
and operating costs
|
537,452 | 234,477 | 319,003 | 861,303 | 323,851 | |||||||||||||||
Loss
from operations
|
(537,452 | ) | (234,477 | ) | (319,003 | ) | (861,303 | ) | (323,851 | ) | ||||||||||
Interest
income, net
|
601,144 | 119,927 | 2,426,933 | 3,029,613 | 2,428,469 | |||||||||||||||
Income
(loss) before provision for income taxes
|
63,692 | (114,550 | ) | 2,107,930 | 2,168,310 | 2,104,618 | ||||||||||||||
Benefit
(provision) for income taxes
|
(38,848 | ) | 41,443 | (951,394 | ) | (990,846 | ) | (951,998 | ) | |||||||||||
Net
income (loss)
|
$ | 24,844 | $ | (73,107 | ) | $ | 1,156,536 | $ | 1,177,464 | $ | 1,152,620 | |||||||||
Accretion
of trust income related to common stock subject to possible conversion
|
(33,872 | ) | (25,044 | ) | - | (33,872 | ) | - | ||||||||||||
Net
income (loss) attributable to common stockholders
|
$ | (9,028 | ) | $ | (98,151 | ) | $ | 1,156,536 | $ | 1,143,592 | $ | 1,152,620 | ||||||||
Basic
and diluted net income (loss) per share
|
$ | (0.00 | ) | $ | (0.01 | ) | $ | 0.16 | ||||||||||||
Weighted
average number of shares outstanding excluding shares subject to possible
conversion - basic and fully diluted
|
7,381,081 | 7,381,081 | 7,319,371 |
As of
March 31,
2009
|
As
of
June
30, 2008
|
||||||
Balance
Sheet Data:
|
|||||||
Total
assets
|
$ |
65,146,211
|
$ | 64,838,909 | |||
Total
Liabilities
|
$ |
741,483
|
$ | 459,025 | |||
Common Stock
Subject to Possible Conversion
|
$ |
18,980,148
|
$ | 18,946,276 | |||
Total
Stockholders’
equity
|
$ |
45,424,580
|
$ | 45,433,608 |
Year
ended
December 31,
2008
|
Year
ended
December
31,
2007
|
Year
ended
December
31,
2006
|
Year
ended
December
31,
2005
|
|||||||||||||
Statements
of Operations Data:
|
||||||||||||||||
Revenue
|
$ | 14,225,237 | $ | 18,987,149 | $ | 15,151,506 | $ | 14,406,251 | ||||||||
Cost
of Revenue
|
(4,660,441 | ) | (4,844,541 | ) | (3,757,422 | ) | (1,925,034 | ) | ||||||||
Gross
Profit
|
9,564,796 | 14,142,608 | 11,394,084 | 12,481,217 | ||||||||||||
Other
Income
|
- | 28,802 | 102,261 | 10,337 | ||||||||||||
Selling,
General and Administrative Expenses
|
2,468,316 | (1,712,931 | ) | (1,607,264 | ) | (1,376,299 | ) | |||||||||
Income
Before Income Taxes
|
7,096,480 | 12,458,479 | 9,889,081 | 11,115,255 | ||||||||||||
Income
Taxes
|
- | - | - | - | ||||||||||||
Net
Income
|
$ | 7,096,480 | $ | 12,458,479 | 9,889,081 | $ | 11,115,255 |
As
of
|
||||||||||||||||
December
31,
2008
|
December
31,
2007
|
December
31,
2006
|
December
31,
2005
|
|||||||||||||
|
||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Total
Assets
|
$ | 2,627,223 | $ | 3,670,398 | $ | 2,428, 815 | $ | 2,282,025 | ||||||||
Total
Liabilities
|
$ | 1,711,540 | $ | 2,995,317 | $ | 2,177,276 | $ | 2,141,950 | ||||||||
Total
Equity
|
$ | 915,633 | $ | 675,081 | $ | 251,539 | $ | 140,075 |
Year
ended
December 31, 2008 |
For the period from
March 30, 2007 (inception) to December 31, 2007 |
|||||||
Income
Statement Data:
|
||||||||
Net
Revenue
|
$ | 4,344,012 | $ | - | ||||
Cost of revenue | 950,257 | - | ||||||
Operating
expenses
|
3,264,683 | 31,220 | ||||||
Income
(loss) from operations
|
129,072 | (31,220 |
)
|
|||||
Other
income (expense)
|
||||||||
Other
expense
|
(5,723 | ) | - | |||||
Interest
expense
|
(3,027,511 | ) | - | |||||
Interest
income
|
132,180
|
- | ||||||
(2,901,054 | ) | - | ||||||
Income Tax | 637,691 | - | ||||||
Net
loss before noncontrolling interest
|
(3,409,673 | ) | (31,220 |
)
|
||||
Non-controlling
interest
|
(1,127,391 | ) | - | |||||
Net
loss
|
$ | (4,537,064 | ) | $ | (31,220 |
)
|
December 31, 2008
|
For the period from
March 30, 2007 (inception)
to December 31, 2007
|
|||||||
|
|
|||||||
Balance
Sheet Data:
|
||||||||
Total
assets
|
$ | 46,269,332 | $ | 36,731 | ||||
Total
liabilities
|
$ | 45,697,690 | $ | 66,951 | ||||
Noncontrolling Interest | $ | 1,257,807 | $ | - | ||||
Total
stockholders’
equity (deficit)
|
$ | (686,165 | ) | $ | (30,220 | ) |
China
Networks Media LTD. (Carve - out)
|
||||||||||||||||
A
|
B
|
C
|
A+B-C
|
|||||||||||||
Six months
ended June
30,
2008
|
Year ended
December 31,
2007
|
Six months
ended June
30,
2007
|
Year ended
June 30, 2008
|
|||||||||||||
Historical
|
Historical
|
Historical
|
Derived
|
|||||||||||||
Revenues
|
$ | 8,772,248 | $ | 18,987,149 | $ | 9,664,794 | $ | 18,094,603 | ||||||||
Cost
or revenue
|
3,037,439 | 4,844,541 | 1,948,853 | 5,933,127 | ||||||||||||
Amortization
of intangibles
|
||||||||||||||||
General
and administrative
|
1,032,904 | 1,712,931 | 818,524 | 1,927,311 | ||||||||||||
Operating
income (loss)
|
4,701,905 | 12,429,677 | 6,897,417 | 10,234,165 | ||||||||||||
Other
income
|
- | 28,802 | - | 28,802 | ||||||||||||
NET
INCOME
|
4,701,905 | 12,458,479 | 6,897,417 | 10,262,967 |
Total
Purchase Price and Consideration:
|
||||
Cash
– CN Network Preferred Shareholders
|
$ | 7,000,000 | ||
Cash
– CN Network Common Shareholders
|
10,000,000 | |||
980,000
shares of Alyst/CN Holdings common stock ($7.86 per share) issuable to CN
Network Preferred Shareholders
|
7,708,000 | |||
1,900,000
shares of Alyst/CN Holdings common stock ($7.86 per share) issuable to CN
Network Common Shareholders
|
14,943,000 | |||
Consideration
to selling stockholders on closing
|
39,651,000 | |||
Acquisition
and closing costs
|
2,902,000 | |||
Total
Purchase Price
|
42,553,000 | |||
Assumption of Bridge Loan Indebtedness (including allocation to preferred stock) | 27,991,000 | |||
Total
Purchase Price, including assumption of indebtedness
|
$ | 70,544,000 |
Total
|
Year
1
|
Year
2
|
Year
3
|
|||||||||||||
Cash
|
$ | 6,000,000 | $ | 3,000,000 | $ | 3,000,000 | $ | — | ||||||||
Issuance
of shares to CN Network holders
|
70,783,000 | 22,415,000 | 24,184,000 | 24,184,000 | ||||||||||||
Amount
|
$ | 76,783,000 | $ | 25,415,000 | $ | 27,184,000 | $ | 24,184,000 | ||||||||
Shares
of common stock
|
9,000,000 | 2,850,000 | 3,075,000 | 3,075,000 |
Alyst
Acquisition Corp./China |
China
Networks Media, LTD.
(CN |
Pro
Forma Adjustments–no conversion |
Notes
|
Pro
Forma Combined-no |
ProFormaAdjustments- maximum allowable
conversion |
Notes
|
Pro
Forma Combined- Conversion
|
|||||||||||||||||||||||||||||||||
Assets
|
|
Dr
|
Cr
|
|
Dr
|
Cr
|
||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 716,618 | $ | 12,941,200 | $ | 63,518,925 | $ | 22,633,980 |
1,
3, 4, 5, 7
|
$ | 54,542,763 | $ | - | $ | 18,980,148 |
8
|
$ | 35,562,615 | ||||||||||||||||||||||
Cash
held in trust account, interest available
|
- | - | - | - | ||||||||||||||||||||||||||||||||||||
for
working capital and taxes
|
251,733 | - | - | 251,733 |
1
|
- |