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Technology Stocks : PCW - Pacific Century CyberWorks Limited

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To: ms.smartest.person who wrote (104)	1/18/2001 4:55:57 PM
From: ms.smartest.person	Read Replies (1) of 2248

Telstra Has to Go with the Low New lows being set by Pacific Century CyberWorks shares are reinforcing market perceptions that Telstra has picked a weak sister as its pan-Asian alliance partner. By Pete Young The internet and telecom company slid a further 3 per cent on the Hong Kong Exchange, to $HK4, less than half its value three months ago. Market rumours suggest that PCCW shares could sink to as low as $3 although some analysts put the net asset value of the stock at around $6. The risk to Telstra from PCCW's slumping share price "is the perception it is allied with a company that is going down the drain", said Nigel Coe, a Hong Kong analyst with Deutsche Securities. "But on our forecasts, there shouldn't be liquidity concerns with PCCW ... it's not going to go bankrupt." Even at current prices, it is not sensible for Telstra to convert into PCCW shares the $750 million note it holds as part of the partnership pact it renegotiated last October. The lower the share price goes, the more Telstra will lose if it converts the bond into PCCW stock. But the deal has an escape clause which allows Telstra to force a straight repayment of the $750 million at any time over the next four years. The October agreement won approval this week at PCCW's annual general meeting. It is a vital element in the company's ability to lock in further billions in bank support and repay bridging finance, analysts say. PCCW's arrangements with its banks are contingent on the Telstra deal, said Coe. The renegotiated deal gives Telstra control over a joint mobile venture and trims $1 billion from the capital it had to invest. Coe said he expected the agreement to be signed, sealed and delivered in the next two weeks, although Telstra officials are talking in terms of months. According to Telstra spokeswoman Catherine Payne, PCCW's share slump "doesn't change our position ... we remain committed and confident". thestandard.com.au

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