Pandatel, Dowslake Microsystems merge

November 21, 2005 Hamburg, Germany and Santa Clara, CA -- Pandatel, a publicly traded company at the German Prime standard market and a specialist in Ethernet and optical networking, announced that Dowslake Venture Ltd., a major shareholder of Dowslake Microsystems, has acquired 29% of Pandatel shares from Augusta AG (Frankfurt). According to a press release, Dowslake Venture intends to purchase the remaining 20.98% of Pandatel stock from Augusta subject to regulatory approval.

Nov 21st, 2005

November 21, 2005 Hamburg, Germany and Santa Clara, CA -- Pandatel, a publicly traded company at the German Prime standard market and a specialist in Ethernet and optical networking, announced that Dowslake Venture Ltd., a major shareholder of Dowslake Microsystems, has acquired 29% of Pandatel shares from Augusta AG (Frankfurt).

According to a press release, Dowslake Venture intends to purchase the remaining 20.98% of Pandatel stock from Augusta subject to regulatory approval, especially an exemption from the obligation to submit a mandatory takeover offer to all the outstanding shareholders.

Dowslake Venture's general partner, Dr. Dan D. Yang, has been appointed as the new CEO of Pandatel, effective immediately.

At the same time as her appointment, Dr. Yang has received the consent of the supervisory board of Pandatel, and of the board of Dowslake Microsystems, to initiate a process of operations restructuring. The restructuring plan involves the merger of Dowslake Microsystems, of which Dr. Yang is a majority shareholder, into Pandatel, subject to shareholders and regulatory approval.

"I'm delighted to take my new role to lead a joint effort in restructuring Pandatel," comments Yang. "As a major shareholder of both Pandatel and Dowslake Microsystems, I'm sure Pandatel has all the ingredients to successfully turnaround its operations."

"On behalf of Pandatel, we are excited about the opportunity in front of us," adds Thomas Becker, Pandatel's current CFO. "Combining Pandatel's IP access products with Dowslake's advanced optical networking products, together with Dowslake's North American presence and its low-cost manufacturing facility in China, will not only expand our market, but [will also] substantially reduce our cost and [allow us to] offer more competitive products"

As part of the restructuring plan, Pandatel says it intends to significantly streamline and refocus its German operations.

Also, upon shareholder, regulatory, and board final approval, and subject to a valuation and confirmation by an independent auditing company, Pandatel is considering offering Dowslake shareholders the option to exchange their shares for Pandatel stock. Prior to the exchange and upon shareholder approval, Pandatel intends to increase its current capital structure from about 8 million to 23 million shares. Dowslake has about 15 million shares outstanding. According to the release, the transaction could be valued at approximately 11 million Euro based on Pandatel's stock price at last Friday's closing, as subject to an appraisal by an independent auditing company.

Pandatel's Q3 revenue was 2.9 million Euro with an operating loss of 5 million Euro. The company says its revenue has fallen more than 70% since the beginning of the market downturn, from a peak revenue of 34 million in 2001, to an estimated 10 million in 2005.

Dowslake's un-audited Q3 revenue is approximately $1 million, with an operating profit of approximately $130,000, for a net earning ratio of 13%. Pandatel says that Dowslake Microsystems is one of the few companies in the telecom space with consistent revenue growth, as well as profitability.

The combined company will have estimated annual sales of 14 million Euros, and a combined cash reserve of more than 10 million Euros. The company says it hopes to return to profitability by Q1 2007, following the completion of the restructuring plan. Pandatel expects to finalize the merger in Q1 2006.

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