Debt-Laden Dot-Com Looks for New Management: CyberWorks Plans Overhaul
Thomas Crampton International Herald Tribune
Friday, May 18, 2001
Debt-Laden Dot-Com Looks for New Management
HONG KONG Wanted: High-level executive to lead Internet company whose stock has plunged 90 percent since August. Ideal candidate is risk-taker experienced at managing heavy debt and able to reverse decline of former telecom monopoly that was once Hong Kong's biggest company.
Pacific Century CyberWorks Ltd., the telecommunications company that once was a high-flying Hong Kong Internet start-up, on Thursday confirmed a report that headhunters were searching for several high-level executives and that the company's prominent founder, Richard Li, may reduce his direct management role. The announcement comes hard on the heels of heavy losses, the revelation that Mr. Li's educational credentials had been exaggerated and an analyst report critical of the company's corporate governance.
Markets were cheered by news of the leadership search, sending the company's American depository receipts up 3.2 percent Wednesday to $3.57; shares in Hong Kong rose 1.9 percent Thursday to close at 2.75 Hong Kong dollars (35 U.S. cents). A company spokeswoman, Joan Wagner, said Pacific Century CyberWorks was not seeking to replace Mr. Li, but she affirmed quotes attributed to Mr. Li that described a reshuffle in the highest levels of leadership.
"I may consider recruiting a managing director or chief executive officer, but I would remain as chairman," Mr. Li said, according to Ms. Wagner. "It's very normal for any company to have two different people as chairman and CEO."
A reduced role would be a setback for Mr. Li, the 34-year-old son of the Hong Kong billionaire Li Ka-shing. The recruitment drive is seen by many analysts as a move toward credible management for a company that was conceived and run as a dot-com. Mr. Li leveraged the company's shares at the peak of the Internet craze to buy Hong Kong's former telecom monopoly, Cable Wireless HKT. Mr. Li beat a rival bid from Singapore Telecommunication Ltd. but in so doing left his company saddled with a $12 billion debt.
Mr. Li's vision was to create a multimedia telecommunications company. By the time annual results were announced in April, however, the company's telephone business accounted for almost all revenue and it had a negative shareholder equity, with total debts outweighing assets. CyberWorks was ranked last in a corporate governance survey published last month by Credit Lyonnais Securities Asia Ltd., which cited a confusing corporate strategy and poor shareholder accountability.
Mr. Li, who refused a request for a direct interview, has shunned media contact since admitting that his company had incorrectly said he was a graduate of Stanford University. Several groups of shareholders in the United States have threatened class-action lawsuits based on Mr. Li's admission.
Copyright © 2001 The International Herald Tribune
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