SOURCE: China Cablecom Holdings, Ltd.

June 18, 2008 08:26 ET

China Cablecom Completes Phase One Acquisition of Hubei Chutian Network

Phase One of Hubei Acquisition Adds Over 800,000 Paying Subscribers; China Cablecom's Total Paying Subscribers After Acquisition Exceeds 1.2 Million

SHANGHAI, CHINA--(Marketwire - June 18, 2008) - China Cablecom Holdings, Ltd. ("China Cablecom") (OTCBB: CCCHF) (OTCBB: CCCZF) (OTCBB: CCCWF), a joint-venture provider of cable television services in the People's Republic of China (PRC), today announced that it has completed the first phase of a previously announced agreement to acquire a 60 percent economic interest in Hubei Chutian Video & Information Network ("Hubei Broadcasting"), a joint venture with Hubei Chutian Broadcasting and Television Network Co., Ltd. ("Hubei Chutian"), a local state-owned enterprise, owned by the Hubei branches of China's State Administration of Radio Film and Television ("SARFT") and nine other municipal branches of China's SARFT in Hubei province.

The consummation of phase one, representing 17 cities, of the Hubei Broadcasting acquisition secures over 800,000 additional paying subscribers for China Cablecom. Total consideration to be paid for phase one will be approximately $55 million and will be payable in installments. China Cablecom will be able to consolidate 60 percent of the financial results of operations and cash flows of Hubei Broadcasting into its financial results pursuant to US Generally Accepted Accounting Principles from the date of closing. Phase two, which was previously announced, would represent an additional 800,000 paying subscribers and is pending further due diligence and execution of definitive agreements.

Located in the Hubei province in central China, Hubei Chutian controls over 30 cable network systems, which serve approximately 50 percent of a total provincial population base of 60.3 million. The Hubei Chutian cable network passes 4.5 million homes and has approximately 3.0 million paying subscribers.

Summary financial information, reflecting 100 percent of Hubei Chutian on a stand-alone basis, and non-financial operating metrics for the 17 cities acquired is as follows:

                                                              Quarter ended
                                                                March 31,
                         2006          2007      % Increase       2008
                     ------------  ------------  ------------  ------------
(revenues and EBITDA         (audited)                         (unaudited)
 in millions)


Revenues             $       14.3  $       19.3           35%  $        6.1

EBITDA               $        6.2  $        8.0           29%  $        2.5

Paying subscribers        664,601       784,642           18%       821,342

ARPU                 $       1.79  $       2.05           15%  $       2.05

Hubei Chutian's audited balance sheet at December 31, 2007 reported $44.5 million in property, plant and equipment, net of depreciation, and $7.1 million in equity.

Selected unaudited pro forma information, reflecting China Cablecom's 60 percent consolidation of the 17 cities acquired from Hubei Chutian, is as follows:

                                                             Quarter ended
Consolidated pro forma China Cablecom (1)          2007      March 31, 2008
(revenues and EBITDA in millions)             -------------  --------------

Revenues                                      $        26.3  $          8.1

EBITDA                                        $         7.3  $          2.3

Paying subscribers                              1.1 million     1.2 million

(1) Assumes the following took place on January 1, 2007: (1) the business combination between Jaguar Acquisition Corporation and China Cablecom and (2) the consummation of the consolidation of 17 cities included in phase one of the Hubei Broadcasting acquisition.

Selected statistical and demographic information relating to the 17 cities acquired in phase one are as follows:

        Total households                        2.7 million
        Homes passed                            1.0 million
        Cable TV penetration                    38.5%
        Population                              9.2 million
        GDP growth (Hubei province)             22.1%

According to analysis by Skillnet GmbH, Hubei Province has the 6th largest cable broadcasting market in the PRC. Government directives mandate the conversion of the entire country to digital cable TV by 2015, which allows cable TV operators to drive significant revenue growth and enhance margins which is complemented by selling higher priced value-added services and content, such as broadband internet service. According to the digitalization plan announced by SARFT, by 2010, 57 percent of cable households in the Hubei province are expected to convert to digital, an increase of approximately 110 percent, while ARPUs are expected to reach approximately $3.45 per month, representing an approximate 72 percent increase from current levels associated with existing subscribers of analog service.

This is the second major acquisition by China Cablecom since the company was founded in October of 2006. It follows the company's September 2007 acquisition of Binzhou Broadcasting and Television Information Network Co., Ltd. ("Binzhou Broadcasting"), an operating cable TV joint venture with a local SOE owned by the Binzhou branches of SARFT in the Shandong province.

"I am very pleased to report our closure of phase one of the acquisition of Hubei on schedule. With over 1.2 million current paying subscribers, China Cablecom ranks as one of the largest cable operators in the world by subscribers," says Clive Ng, founder and Executive Chairman of China Cablecom. "Our team continues to successfully execute our expansion goals and securing this joint venture has allowed us to create significant organic growth opportunities through recurring subscription-based revenues thereby strengthening our cash flow from operations."

Mr. Ng concluded, "With the nation-wide digital migration initiative gaining momentum, China Cablecom is committed to its digitization strategy as we move into the new era of digital TV broadcasting. We will continue to look for profitable acquisition opportunities to diversify revenue and enhance the long term value of China Cablecom Holdings for its shareholders."

Outlook for the full year 2008 (1)

To enhance comparability, China Cablecom is providing its outlook for 2008 on a pro forma basis.

For full year 2008, China Cablecom anticipates pro forma EBITDA of $11 million as we continue to add analog and digital subscribers throughout 2008.

On a GAAP basis, China Cablecom anticipates the recognition of a net loss of $10 million for full year 2008. The net loss for 2008 is primarily attributable to (1) the non-cash amortization of intangible assets which were acquired in connection with China Cablecom's acquisitions of Binzhou Broadcasting and Hubei Broadcasting and (2) non-cash interest expense associated with the original issue debt discount and deferred financing costs relating to China Cablecom's September 2007 bridge financing and May 2008 convertible note financing.

                                             2008 (1)
                                            -----------

Homes passed                                1.8 million
Paying subscribers                          1.4 million
Digital subscribers                             300,000

(1) The pro forma projections assume that the following took place on January 1, 2008: (1) the business combination between Jaguar Acquisition Corporation and China Cablecom and (2) the consummation of the consolidation of 17 cities acquired in phase one of the Hubei Broadcasting acquisition. Pro forma EBITDA is defined as net loss before interest, taxes, depreciation, amortization and other non-recurring acquisition-related charges.

About China Cablecom Holdings

China Cablecom Holdings is a joint-venture provider of cable television services in the People's Republic of China, operating in partnership with a local state-owned enterprise ("SOE") authorized by the PRC government to control the distribution of cable TV services through the deployment of analog & digital cable services. China Cablecom recently entered into an agreement to acquire a 60 percent economic interest in a cable network in Hubei province with paying subscribers exceeding 800,000. The Company originally acquired operating rights of the Binzhou Broadcasting network in Binzhou, Shandong Province in September 2007 by entering into a series of asset purchase and services agreements with a company organized by SOEs owned directly or indirectly by local branches of SARFT in five different municipalities to serve as a holding company of the relevant businesses. China Cablecom operates 22 cable networks with over 1.2 million paying subscribers. China Cablecom Holdings' strategy is to replicate the acquisitions by operating partnership models in other municipalities and provinces in the PRC and then introducing operating efficiencies and increasing service offerings in the networks it operates.

Non-GAAP Financial Measures

This release contains discussion of China Cablecom's revenues, and projected and pro forma revenues, as well as earnings before interest, taxes, depreciation and amortization (EBITDA) and projected/pro forma EBITDA and EBITDA and projected/pro forma ARPU. Although EBITDA and projected/pro forma EBITDA are not measures of financial condition or performance determined in accordance with Generally Accepted Accounting Principles, China Cablecom uses EBITDA to value businesses it acquires or anticipates acquiring. EBITDA and projected/pro forma EBITDA are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same.

Below is a table reconciling certain non-GAAP financial measures appearing elsewhere herein relating to Hubei Chutian on a stand-alone basis to the most closely analogous GAAP measures:

                             Year Ended December 31,
                         --------------------------------
                                                            Quarter Ended
                               2006             2007       March 31, 2008
                         ---------------  ---------------  ---------------
                                            (unaudited)
Net income               $     2,485,968  $     3,442,004  $     1,080,721
Depreciation and
 amortization                  2,752,914        3,892,797        1,146,258
Interest income                   (9,145)         (14,620)          (3,715)
Interest & finance                49,111          109,793           19,146
Income tax                       953,609          617,060          249,231
                         ---------------  ---------------  ---------------
Non-GAAP income (EBITDA) $     6,232,457  $     8,047,034  $     2,491,641
                         ===============  ===============  ===============

Below is a table reconciling certain non-GAAP financial measures relating to China Cablecom's consolidated pro forma net income, reflecting China Cablecom's 60 percent consolidation of Binzhou Broadcasting and the 17 cities acquired from Hubei Chutian, to the most closely analogous GAAP measures:

                                                            Quarter Ended
                                                2007       March 31, 2008
                                          ---------------  ---------------
                                                 (Unaudited in USD)
Net income                                $       276,970         (927,762)
Amortization                                      652,851          618,345
Depreciation                                    3,637,744        1,265,553
Interest income                                  (107,333)         (20,696)
Interest & finance                              2,326,105        1,096,689
Income tax                                        513,005          226,227
                                          ---------------  ---------------
Non-GAAP income (EBITDA)                  $     7,299,342  $     2,258,356
                                          ===============  ===============

Safe Harbor Statement

The matters discussed in this press release contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this presentation and in the Company's other written and oral reports are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Any forward-looking statements are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry may differ materially from those made in or suggested by the forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties and assumptions. The forward-looking statements herein speak only as of the date stated herein and might not occur in light of these risks, uncertainties, and assumptions. China Cablecom Holdings undertakes no obligation and disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should carefully consider these factors as well as the additional risk factors outlined in the filings that China Cablecom Holdings makes with the U.S. Securities and Exchange Commission, including the Registration Statement on Form S-1 filed on April 18, 2008.

HUBEI CHUTIAN RADIO & TELEVISION INFORMATION NETWORK CO., LTD.
(17 BRANCHES - CARVE-OUT)
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,

                                                        (Audited)
                                                    2007          2006
                                                    USD           USD
                                                ------------  ------------

Revenues, net                                   $ 19,294,877  $ 14,266,818

Cost of revenues                                  (2,205,021)   (1,805,627)
                                                ------------  ------------

Gross profit                                      17,089,856    12,461,191


General and administrative expenses               (5,224,199)   (3,812,870)
Sales and marketing expenses                      (8,169,038)   (5,676,668)
Finance cost                                        (109,793)      (49,111)
                                                ------------  ------------

Operating income                                   3,586,826     2,922,542

Interest income                                       14,620         9,145
Other income                                         457,618       507,890
                                                ------------  ------------

Income before income taxes                         4,059,064     3,439,577

Provision for income tax                            (617,060)     (953,609)
                                                ------------  ------------

Net income                                      $  3,442,004  $  2,485,968
                                                ============  ============




HUBEI CHUTIAN RADIO & TELEVISION INFORMATION NETWORK CO., LTD.
(17 BRANCHES - CARVE-OUT)
COMBINED BALANCE SHEETS
DECEMBER 31,

                                                          (Audited)
Assets                                                2007         2006
                                                      USD          USD
                                                  ------------ ------------
Current assets
  Cash                                            $  1,933,257 $  1,992,309
  Accounts receivable, net                             272,500      222,378
  Prepayments and other receivables                  1,239,969    1,579,312
  Inventories                                        1,061,075      947,938
                                                  ------------ ------------
Total current assets                                 4,506,801    4,741,937
                                                  ------------ ------------

Non-current assets
Property, plant and equipment, net                  44,471,683   39,472,481
Intangible assets, net                                 233,665      223,382
Construction in progress                               345,020      500,638
Deferred tax assets                                     73,371       22,886
                                                  ------------ ------------

Total non-current assets                            45,123,739   40,219,387
                                                  ------------ ------------

Total assets                                      $ 49,630,540 $ 44,961,324
                                                  ============ ============

Liabilities and equity

Current liabilities
  Accounts payable                                $  3,144,547 $  2,725,914
  Accrued expenses and other payables                4,822,359    5,957,103
  Amounts due to Hubei Chutian                      32,170,242   31,282,540
  Tax payable                                        2,377,540    1,639,614
                                                  ------------ ------------
Total current liabilities                           42,514,688   41,605,171
                                                  ------------ ------------

Equity
  Retained earnings                                  6,716,275    3,274,271
  Accumulated other comprehensive income
       Foreign currency translation adjustment         399,577       81,882
                                                  ------------ ------------

Total equity                                         7,115,852    3,356,153
                                                  ------------ ------------

Total liabilities and equity                      $ 49,630,540 $ 44,961,324
                                                  ============ ============




HUBEI CHUTIAN RADIO & TELEVISION INFORMATION NETWORK CO., LTD.
(17 BRANCHES - CARVE-OUT)
COMBINED STATEMENTS OF OPERATIONS


                                                        (Unaudited)
                                                    Quarter      Quarter
                                                     ended        ended
                                                   March 31,    March 31,
                                                      2008         2007
                                                      USD          USD
                                                  -----------  -----------

Revenues, net                                     $ 6,075,086  $ 4,558,491

Cost of revenues                                     (765,716)    (467,852)
                                                  -----------  -----------

Gross profit                                        5,309,370    4,090,639


General and administrative expenses                (1,915,945)  (1,278,424)
Sales and marketing expenses                       (2,351,604)  (2,005,288)
Finance cost                                          (19,146)     (37,047)
                                                  -----------  -----------

Operating income                                    1,022,675      769,880

Interest income                                         3,715        2,304
Other income                                          303,562      205,163
                                                  -----------  -----------

Income before income taxes                          1,329,952      977,347

Provision for income tax                             (249,231)    (141,061)
                                                  -----------  -----------

Net income                                        $ 1,080,721  $   836,286
                                                  ===========  ===========



HUBEI CHUTIAN RADIO & TELEVISION INFORMATION NETWORK CO., LTD.
(17 BRANCHES - CARVE-OUT)
COMBINED BALANCE SHEETS

                                                        (Unaudited)
                                                   March 31,   December 31,
Assets                                                2008         2007
                                                      USD          USD
                                                  ------------ ------------
Current assets
  Cash                                            $  2,153,767 $  1,933,257
  Accounts receivable, net                             225,728      272,500
  Prepayments and other receivables                  1,651,488    1,239,969
  Inventories                                        1,467,114    1,061,075
                                                  ------------ ------------
Total current assets                                 5,498,097    4,506,801
                                                  ------------ ------------

Non-current assets
Property, plant and equipment, net                  46,352,388   44,471,683
Intangible assets, net                                 242,540      233,665
Construction in progress                               776,599      345,020
Deferred tax assets                                     81,931       73,371
                                                  ------------ ------------

Total non-current assets                            47,453,458   45,123,739
                                                  ------------ ------------

Total assets                                      $ 52,951,555 $ 49,630,540
                                                  ============ ============

Liabilities and equity

Current liabilities
  Accounts payable                                $  3,151,358 $  3,144,547
  Accrued expenses and other payables                6,091,798    4,822,359
  Amounts due to Hubei Chutian                      32,471,396   32,170,242
  Tax payable                                        2,729,339    2,377,540
                                                  ------------ ------------
Total current liabilities                           44,443,891   42,514,688
                                                  ------------ ------------

Equity
  Retained earnings                                  7,796,996    6,716,275
  Accumulated other comprehensive income
       Foreign currency translation adjustment         710,668      399,577
                                                  ------------ ------------

Total equity                                         8,507,664    7,115,852
                                                  ------------ ------------

Total liabilities and equity                      $ 52,951,555 $ 49,630,540
                                                  ============ ============

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