CyberWorks Says U.S. Watchdog Hasn't Ruled on Write-off Request
By Kenneth Wong
Hong Kong, May 28 (Bloomberg) -- Pacific Century CyberWorks Ltd., Hong Kong's dominant telephone company, said the U.S. securities regulator hasn't ruled on a request for permission to write off $22 billion in goodwill against reserves.
``The decision hasn't been finalized,'' said CyberWorks Chairman Richard Li in an interview during a trip to Urumqi, capital city of China's Xinjiang province, during a government- led business tour of western China.
U.S. law requires companies to charge the difference between the book value of an acquired company and its purchase cost against earnings, a process that would take CyberWorks several years, making the company unprofitable.
In Hong Kong, the company wrote off the entire cost of acquiring Cable & Wireless HKT Ltd. against reserves in 2000 earnings, leaving with a balance sheet deficit $1.8 billion -- and set to return to profit in 2001 in Hong Kong accounts.
Ming Pao Daily News reported today, citing a CyberWorks internal memo, that the SEC probably won't grant a waiver when it rules in June, leaving the company with assets worth $17 billion in its U.S. accounts.
Some investment funds that aren't allowed to invest with companies without asset value have sold their CyberWorks shares since the company released 2000 earnings on March 20.
CyberWorks shares fell as much as 1.9 percent today. The stock changed hands at HK$2.675 at the lunch break, a 0.9 percent decline.
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