The Amusing, the Dubious and the Shameless
Date : APR 24, 2001
Why does everything come in threes? Three companies, well known to Quamnet readers, are in the news again for reasons which can be described as: amusing, if you are not an investor; dubious, if you are; and shameless, if you remain foolish enough to believe that there is much in the way of credibility for a company hell bent on destroying confidence in its future.
Let us start with that which many readers may find to be amusing. The long running minority shareholders battle at the Jardine group is about to erupt again at the annual meetings of the group's companies to be held in that conveniently located Caribbean island of Bermuda. Yet again the American investment company Brandes Investment Partners will spearhead a move to loosen the Keswick family's control over the group and, so they argue, release the underlying value in the stocks by exposing the companies to control from elsewhere.
One result of this move, if successful, would be to secure re-listings for the Jardine group in Hong Kong. This would see the return of counters such as Jardine Strategic Holdings and Hongkong Land. Readers may recall that they left Hong Kong in 1994 after Jardines unsuccessfully demanded that the stock exchange make special exemptions on their behalf. These would have amounted to providing a platform for the trading of their shares while taking away many of the exchange's regulatory powers over the companies.
Jardines¡¦ bluff was called and they established listings in Singapore to accompany the main listing in London. The net result was a sharp reduction in the trading of Jardine group shares and their consistent under-performance of the market.
Should Brandes and its allies be successful, Jardines will return to Hong Kong, the vultures will return to see what can be picked off within the group, and a rare old time will be had by all. As long as you have not been a Jardines investor, this is likely to be a source of great entertainment. If the minority shareholders succeed it could also be a source of great profit because changing the group structure will quickly stimulate speculative buying of Jardine stock.
The words amusement and profit however are not likely to crop up when contemplating the fate of renren Media Ltd. To quickly recap, this was the company founded by a bunch of venture capitalists seeking to become major players in the Chinese dotcom market. Just before the Chinese dotcom boom became a bust last year, renren achieved a backdoor listing on the Hong Kong stock exchange following a reverse takeover of Ankor, an ailing car distributor.
With its usual disregard for minority shareholders interests, the stock exchange allowed this takeover to take place without a general offer being made.
Everything was wrong about both the offer and the business as was seen on Monday 23 April when renren announced its annual results for 2000. It showed that losses of HK$92.6 million incurred in 1999 had more than doubled to HK$190 million last year.
Now, the great minds who created renren and took over Ankor are being offered an exit by Sky Concord Development, the property investor which is offering HK$68 million in cash to buy out the company. This compares with the HK$229 million renren paid to takeover Ankor just a year ago.
The battered shareholders of Ankor, and now renren, have little choice but to go along with the Sky Concord offer. However they have been told that it comes with no plans for new investment and no intention to change the current, clearly inadequate business operations which form the basis of the company's lacklustre performance.
This brings us to another company which seems to be in a remarkably similar position, albeit on a much bigger scale. Yes, it's our old friend Pacific Century CyberWorks which never misses an opportunity to diminish its credibility.
On the same day we learned of renren's widening losses, PCCW released its annual report showing record remuneration packages for its directors. These gentlemen have presided over a share price collapse exceeding 80 per cent and the transformation of a profit making telephone company into a loss making telecommunications and Internet
conglomerate suffering from negative equity.
The reports says that one of the directors, believed to be the deputy chairman Francis Yuen, was given a package worth HK$283.5 million, making him the highest paid executive in Hong Kong last year. Mr Yuen also benefited, alongside other directors, from selling share options last August in a move that contributed to the rapid fall in the value of PCCW shares.
The company clearly has no shame and sees no reason why directors should share the pain of shareholders. Yet again shareholders will draw their own conclusions from this lamentable state of affairs. [Ends]
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