Davnet pulls plug on HK, Canada operations

Australian telecommunication vendor Davnet Ltd. has ceased operations in Hong Kong and Canada, while its Singapore subsidiary is "continuing to review its alternatives," the company said in a statement Monday.

The closure of these operations follows an agreement with the Hong Kong-based Investment Company of China (ICC), which has made Davnet a A$5 million (US$2.57 million) loan for six months and will go on to take a "significant parcel of equity or semi-equity," according to the statement. That transaction will probably be big enough to require Davnet shareholder approval, the company said.

Davnet previously said it was temporarily stopping funding to the three overseas ventures while sorting out financial matters.

ICC is headed by Alex Adamovich, a lawyer turned investor who has taken part in several corporate restructurings in Asia. ICC handles some regional investments for financier George Soros and the family of Italian businessman Carlo de Benedetti.

As part of the agreement, Davnet directors Brendan Brown and David Whitfield have resigned, to be replaced by Ted Rule and Jean-Marie Simart.

Adamovich, who is on the board of Australian Web hosting company Hostworks Group Ltd., said in a statement that ICC and Davnet will be able to leverage their associations and investments in the call center and data hosting industries.

Davnet has requested that its shares continue to be suspended from trading on the Australian Stock Exchange. Davnet's share price had fallen from A$1.49 in August 2000 to A$0.06 when trading was suspended on Aug. 3. The shares peaked at A$6.00 on March 28, 2000, at the height of the tech stock boom.

Davnet can be contacted via the Web at http://www.davnet.com.au/.

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