HK PCCW Denies Debt Woes Will Force It To Sell AssetsHK PCCW/Assets -2: Telstra Relationship On Firm Ground
11:00, 2001-04-06
HONG KONG (Dow Jones)--Pacific Century CyberWorks Ltd. (PCW) in a statement issued late Thursday denied media reports that it is strapped for cash and looking to sell key assets.
"The company can meet its debt servicing needs and the requirements of its committed programs and projects," the company said in its statement.
A steady decline in the company's stock price and the surprisingly large loss it posted for 2000 have prompted speculation that Pacific Century will be forced to sell off assets, such as its Cyberport project, a government-sponsored technology center and residential property project.
PCCW denied it plans to bail out on the project to help pay off debt.
"PCCW has no plans to reduce its stake in this project and the company categorically rejects any suggestion to the contrary," the company's spokeswoman, Joan Wagner, said in a statement.
The company said it can easily meet its debt payments as it has more than US$1 billion in cash and valuable property and other assets, as well as strong cash flow generated from its telecom operations. In August PCCW took over Hong Kong's leading telecom operator, Cable & Wireless HKT, in the largest corporate takeover in Asia outside Japan.
Pacific Century CyberWorks' shares have been in a freefall recently, losing 25% in the past week to Wednesday's HK$2.60 close after the company surprised the market with a US$886 million loss for 2000. The market was closed Thursday.
The shares have tumbled about 91% from their peak of HK$27.86 set in mid February of last year.
The shares have also been hammered this week by news that Cable & Wireless PLC (CWP) plans to sell its remaining stake in the company through a US$1.5 billion convertible bond issue.
Pacific Century also denied other ``misleading material' published in recent reports, including speculation that its relationship with Australian telecom company Telstra Corp. (TLS) is deteriorating. PCCW and Telstra are partners in several mobile phone and Internet ventures.
Speculation that there has been a deterioration in PCCW's partnership with Telstra ``is patently untrue and has been rejected publicly by senior management of both companies,' the statement said.
A recent news report citing industry speculation said Telstra may take advantage of PCCW's falling share price to secure greater control of their joint venture. PCCW's woes could allow Telstra to trigger clauses within their shareholder agreements to take greater control of the alliance, since without a strong partner in Asia Telstra may fear its expansion plans could stall, the Australian paper reported.
``PCCW has no intention to reduce its proportionate stake in these ventures,' Alex Arena, deputy chairman of PCCW's executive committee, said in the statement.
-By Kirsti Hastings, Dow Jones Newswires; (852) 2832 2337; kirsti.hastings@dowjones.com
Copyright c 1999-2000 Dow Jones Inc. All rights reserved.
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