<648 up??>Quam Views QuamSwer Tony's Portfolio
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Daily Quommentary
24 Oct ,2000
Pacific Century CyberWorks, #8, is seeking US$1.8 billion to reduce its mind boggling debt. Richard Li has come to the rescue and will provide most of this sum either personally or through his Singapore holding company, up to US$1. The funds will be raised through a convertible bond as well as a rather smaller rights issue.
The rights issue is of 30 new shares for each 1,000 shares now held, at the $6.50 price level at which the share had closed on Friday night, and there will be warrants to subscribe for new shares at $7.50 each. Whilst PCCW seems to be issuing new shares at a rate reminiscent of the Indonesian rupiah, and there are now so many options and convertible notes for creditors to switch at all price levels on the way up, that it is difficult to see their dilutive effects. It is most unlikely that Cable & Wireless, who hold 15% of the issue, will subscribe and the underwriter, in this case the said Richard Li, would normally seek to place these shares. Fortunately Li has already dug a corner into which these shares can go as his sale to State Street, for the Tracker Fund, leaves a nice open look.
Whilst Richard would prefer not to be burdened with additional scrip, he would quite likely be pleased to take up the options. These options will also come in useful to those investors and institutions who were locked into the company as they can redeem capital, by selling the shares, and then cover themselves by retaining the warrant.
The bankers, perforce, have come out in favour of the restructuring, as otherwise their principal could be seriously jeopardised, with backing for the bond issue coming from Bank of China, as well as HSBC, BNP and Barclays Capital.
Shareholders in PCCW will be looking at this restructuring with the view of mitigating their own losses, and wondering what action is up to them to take. But it is very unlikely that these measures will attract further investors, as they effectively put a ceiling on the price of $7.50 per share, so the upside is far more restricted than the possible downside.
With PCCW out of action, the share was suspended before trading started yesterday turnover was reduced to $6.7 billion of which HSBC, #5, commanded $920 million, 13.5%. HSBC were very steady rising $3 to $110.50, and carrying with it its satellite, Hang Seng Bank, #11, which added $1.75 to $90.
HSI itself rose 58 to 15,102 after trading between 14,865 and 15,161, still securing the 15,000 mark. Winners and losers were well matched, with advances of 315 against declines of 281. Red chips were hardly changed, up 4 to 1,039 and H shares gained 4 to 400. In China Shanghai A shares added 12 to 2,078 which Shenzhen A gained 5 to 653 in a joint turnover of RMB19 billion.
Banks, under HSBC and HSB above, were generally all better will the notable exception of FPB Bank Holdings, #717, which fell 7.5 cents to $2.775 as tall stories about the price of their hoped-for sale were brought back to earth. It could be possible that a price of $3.50 could be paid but only by another back whose own shares had been sufficiently inflated that they included at least 20% fat. Wing Hang Bank #302, a jack-in-the-box share whose volatile movements are cause for any observer to become quite dizzy. Wing Hang Bank rose $1.35 to $24.10, and one wonders whether this activity should indicate any ulterior motive, or could be steps in a potential merger or acquisition.
China Mobile, #941, was again finding the weight of its heady price too heavy to handle and slipped by $1.50 to $52.55. This tiredness was in the face of a continued rally amongst the minnows of the tech and interest field, with cents being gained by such popular speculators as Culturecom, #343, eKong, #524, ICG Asiaworks, #715, and Softbank, #648.(WE ARE RICHer)
The rally of the more substantial tech shares seems to be petering out, with ASM Pacific, #522, down 60 cents to $13.30 and QPL, #243, down 5 cents to $4.25.
The GEM market still had some life, up 2 to 346, led by Tom.com, #8001, up 7.5 cents to $3.35. (End) |
