ILink Sells Shares at Top of Range in First GEM Sale (Update1)
Hong Kong, Feb. 28 (Bloomberg) -- ILink Holdings Ltd., the first Pacific Century CyberWorks Ltd. unit to be spun off, priced its shares at the top of their offer range after cutting its fund- raising target by at least a fifth because of diminished interest in technology stocks.
ILink priced its 110 million new shares at HK$1.28 each, raising HK$140.8 million ($18 million) in its first share sale. The company, which had said it hoped to raise $23 million from the sale, cut the offer size in the wake of a 16 percent drop in the Growth Enterprise Market since mid-October, when the sale was announced. The shares begin trading on the GEM on March 9.
``We're a technology but not a dotcom company, as we've constant revenue,'' said Billy Tam, chief executive of iLink, which manages and stores information for corporate clients. The company estimates its loss for 2000 won't exceed HK$29 million, or 7.3 HK cents per share.
If CyberWorks were to sell its stake in the venture for HK$1.28 per share, the company would realize an eight-fold return on its investment. CyberWorks' iLink stake is now worth HK$646 million, compared with the HK$71.9 million the company invested to start the venture in September 1999.
Dell Computer Corp. and Henderson Investment Ltd., which bought iLink shares at HK$1.46, or 14 percent more than iLink's offer price, will be given additional shares for free to reflect the reduced value of their investments, iLink said in its listing document.
Ilink downplayed concern about increased competition among Web-hosting companies. ``Our revenue in the fourth quarter was substantially higher'' than previous quarters, said Sam Cheung, iLink's chief financial officer.
Cheung said iLink's Hong Kong operations became profitable in December. The company plans to spend HK$59 million setting up data centers in Taiwan and Shenzhen and has earmarked HK$43 million for operational expenditures this year.
After the share sale, Dell will own 4.6 percent of iLink and Henderson 8.9 percent. Other iLink shareholders include Dotcom Pacific Ventures, which owns 21 percent, and HSBC Trustee, with a 7.6 percent stake. Ilink's strategic shareholders are barred from selling their shares until six months after the listing.
ILink lost HK$28.6 million in the 10 months through October on sales of HK$25.4 million, 40 percent of which were to CyberWorks, its biggest customer. The company said CyberWorks' contribution had dropped to about 20 percent by end of last year as more customers signed up for its services.
BNP Paribas Peregrine Ltd. and e2-Capital Securities Ltd. are arranging the share sale.
CyberWorks gained 1.7 percent to HK$4.45. The shares have lost 80 percent of their value over the past 12 months. will begin March 9.
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