Hutch Subject to 1-Year Lock-Up for Its PCCW Shrs (Update1)
Feb 23, 2001 - 12:26:39 HKT
Quamnet News Service
Hutchison Whampoa Ltd. (0013), controlled by Hong Kong billionaire Li Ka-shing, said it is subject to a one-year lock-up for a stake of about 0.83 to 0.84 percent it received from Pacific Century CyberWorks (0008) by selling the whole of its satellite-based network solutions unit.
The No. 1 Hong Kong conglomerate received 183,634,285 new shares in PCCW at HK$4.375 yesterday for selling its Hutchison Telecommunications Technology Investments group, including satellite communications company Hutchison Corporate Access (HCA).
Hutchison Managing Director Canning Fok said the unit was sold for HK$803.4 million, or a price/earnings ratio of about 60 times. He said he considered the price "good" amid the recent rout in global telecoms stocks, and that the transaction has nothing to do with the relationship between Li Ka-shing and his son, Richard, the chairman of PCCW.
"I'm not sure who is rescuing who. The price is really good," he said, when asked to respond to speculation that the elder Li is trying to help lift the share price of Richard's flagship investment vehicle, PCCW.
Asked why Hutchison opted to receive the consideration in new PCCW shares instead of cash, Fok said the conglomerate already has more than HK$100 billion in cash and marketable securities, an additional HK$803.4 million cash or stocks doesn't make a major difference.
"It all depends on our judgement. (PCCW shares have) already adjusted a lot," Fok said. "We have the least intention to buy PCCW shares in cash. That is not compliant with Hutchison's business."
Asked if Hutchison will sell more telecoms and related assets to PCCW in future in exchange of more shares, he responded by saying "I can't see anything we want to sell."
The transaction was first proposed by PCCW, and the two companies had been in talks for one to two weeks before the deal was struck, Fok said. PCCW shares had managed to buck the overall market downtrend during a few trading days in the past week, though the stock had accumulated a loss of 5.9 percent in the past week, and a loss of 10.7 percent in the past two weeks.
HCA is focusing on building in-country operations and is expected to complement the international services of Reach, the Internet Protocol backbone venture between PCCW and Telstra Corp, according to PCCW.
HCA was founded in 1994 by Pacific Century Group, parent of PCCW, and sold to Hutchison in a 1995 transaction for HK$581.1 million. Fok said the conglomerate decided to sell the business because it doesn't fit in Hutchison after it set up Hutchison Global Crossing and expanded its telecoms business across the globe.
HCA recorded EBITDA (earnings before interest, tax, depreciation and amortization) of HK$30.5 million and after-tax profit of HK$14 million last financial year on revenue of HK$307.7 million.
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