PCCW Says Shareholders' Approval on All Deals Impracticable
Apr 02, 2001 - 10:03:53 HKT
Quamnet News Service
Pacific Century CyberWorks Ltd. (0008) said it would be "impracticable" and "unduly burdensome" for PCCW, now in negative equity, to seek shareholders' approval for every transaction if the relevant provisions of the Listing Rules were to be strictly applied.
PCCW, Richard Li's communications vehicle, sought to clarify that, under the waiver by the stock exchange, the company doesn't need to seek shareholders' approval for deals that are valued at less than HK$2 billion.
"The listing Rules apply in all respects to the company except to the extent modified by the limited waiver," PCCW said in a statement.
Chapter 14 of the Listing Rules requires listed companies to disclose details of certain categories of transaction, and for some transactions, to obtain shareholders' approval, it said.
The level of disclosure required generally depends on the size and nature of the transaction, and transactions are generally classified in accordance with four tests. The application of the "assets test" and the "consideration test" depend on a determination of the net tangible assets of the listed company, meaning that every transaction of a company in negative equity has to be subject to prior shareholders' approval, the company said. It would be impracticable and unduly burdensome for PCCW to be subject to this requirement, considering its scale and scope of operations, it added.
PCCW, therefore, applied to the local exchange following its acquisition of PCCW-HKT Ltd. in August 2000 to exempt from the two tests if the value of the assets being acquired and the value of the consideration given or received for the assets do not exceed HK$2 billion.
This waiver will be subject to review by the exchange at the time PCCW announced its audited results for the year ended Dec. 31, 2000, PCCW said, adding that it will apply for such further waivers as may be appropriate, it said.
In response to concerns of some commentators about the negative net tangible asset position of the company, PCCW pointed out that this potential position was disclosed at its composite document dated May 26, 2000.
PCCW revealed during its results announcement last week that it had written off US$22 billion of HKT goodwill against its reserves, leading to a shareholders' deficit of US$1.8 billion.
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