PCCW bids for C&W HK - It's official: Pacific Century CyberWorks makes formal offer for phone giant
February 27, 2000: 8:48 p.m. ET
HONG KONG (Reuters) - Upstart Hong Kong Internet company Pacific Century CyberWorks said on Monday it had
made a formal offer to merge with the territory's biggest telecommunications company, Cable & Wireless HKT.
The proposal was made to Britain's Cable & Wireless Plc, which has a 54 percent stake in C&W HKT.
"PCCW has made an offer to the board of directors of C&W but terms have not yet been agreed," the company said in a
statement.
The move comes after weeks of efforts by PCCW to outmaneuver Singapore Telecommunications Ltd (SingTel), in talks
with C&W on a possible purchase of a stake in C&W HKT.
Hong Kong and Singapore are fierce commercial rivals and the bid by SingTel, 76 percent owned by Singapore
government investment arm Temasek Holdings, has upset some people in Hong Kong.
PCCW, controlled by 33-year-old Richard Li, second son of Hong Kong's richest tycoon, Li Ka-shing, said its merger bid
was made to C&W and it had as yet to make an offer to C&W HKT.
"No offer has been made to the board of directors of Cable & Wireless HKT although the directors of Cable & Wireless
HKT were informed of the discussions on Friday," it said.
The company gave no further details.
PCCW shares were suspended three minutes into last Friday's session, with shares at HK$22.15. The company said
trading would resume on Monday.
The Wall Street Journal Interactive Edition said PCCW had presented two offers to C&W. One was a cash-and-shares
offer, with shareholders receiving about 0.7 PCCW share and about HK$7 (US$.89) in cash for each C&W HKT share
they own.
A deal at that price would value C&W HKT at HK$22.50 a share, or HK$270 billion.
The other option was an all-stock offer, which includes a 10 percent premium on the cash-and-stock bid. That would put
the price tag on the deal of about US$38.5 billion. The Journal cited individuals familiar with the talks.
On Saturday, the Hong Kong Economic Times said PCCW was proposing to buy C&W HKT for HK$316.2 billion, or
HK$26 per share.
Quoting unidentified sources close to talks on the C&W HKT takeover, the business newspaper said that of the
consideration of HK$26 per share, HK$8 would be paid in cash, and the remaining HK$18 in PCCW shares and bonds
convertible into PCCW shares.
Shares of C&W HKT were up 3.6 percent to close at HK$25.90 on Friday.
HSBC defends actions
In another development, the banking group HSBC dismissed on Monday allegations of potential conflict of interest over its
dealing with C&W HKT.
"What we would like to make absolutely clear is that at all times we have acted properly in our dealing with Cable &
Wireless HKT," an HSBC spokesman in Hong Kong told a radio station.
The Sunday Telegraph said SingTel was preparing to sue HSBC, claiming it broke conflict of interest rules during the
battle for C&W HKT.
The newspaper said SingTel had instructed its lawyers to take action against HSBC in Hong Kong courts on Monday
after it discovered that HSBC was acting for a rival bidder for C&W HKT as well as C&W HKT.
The report said SingTel's action would try to prevent HSBC acting as lead lender to Li's PCCW in its bid for C&W HKT.
But the HSBC spokesman said: "We have not heard from Singapore Telecom nor have we heard from Singapore
Telecom's legal advisers."
HSBC resigned as adviser to C&W HKT directors on Friday but the proposed legal action could derail PCCW's attempt
to complete a deal, the Sunday Telegraph said.
On Monday the Hong Kong Economic Times said PCCW's vice chairman Francis Yuen had met HBSC senior
management and had HSBC's promise to continue to provide the loan.
HSBC and three other banks had signed formal loan documents on Sunday evening that PCCW could use to prove to
Cable & Wireless it had the ability to carry out the takeover bid, the newspaper said.
It quoted PCCW director Alexander Arena as saying PCCW would need more than US$10 billion of loans, of which
about US$4.0 billion would come from HSBC.
Officials from HSBC and PCCW were not immediately available for comment.
I wish to thank an SI friend for Privately Messaging this news to me. I had been searching unsuccessfully for hours for this news and then found his email -- three hours old in my Inbox. Thanks again.
Merry
I expect this means that PCCLF will remain suspended from trading and hope that HKT will be halted, too -- until this is resolved. Maybe we can get beyond the Tom.com-attack before this is trading again! |
