PCCW falls to record low
By CATHY CHAN
Tuesday 24 July 2001
Pacific Century CyberWorks fell to a record low yesterday after its failed attempt to sell $US2.5 billion ($A4.9 billion) of bonds fuelled concerns over its ability to repay debt.
The company said late on Friday that it had scrapped the offer, its first attempt to sell debt publicly. PCCW was unable to convince investors to buy its debt at a time when the prospect of a default in Argentina was hurting emerging-market bonds and telecom stocks were falling.
"The timing of the sale was terrible," said Yvonne Leung, who oversees investments in technology stocks for Towry Law (Asia) in Hong Kong. "Telecom stocks keep disappointing investors. The banks underwriting this deal would have run a huge risk of being left with the bulk of it."
For PCCW, which had told fund managers it wanted to raise as much as $US3.8 billion, the last-minute cancellation may make it more expensive to sell debt in the future, and may hamper its efforts to raise the $US300 million it wants for its "CyberPort" development this year.
That is bad news for a company that has more than $US4.7 billion of debt, is paying about $US20 million a month in interest, and faces slowing fixed-line call revenue as other companies make inroads on what was once a monopoly business.
Growth in its fixed-line business - which accounted for more than three-quarters of its revenue - is expected to slow in both 2002 and 2003, according to research by J.P. Morgan Chase & Co, one of the company's bankers.
"Investors are worried about their financial positions," said Pauline Dan, a fund manager at IG Investment Management (Hong Kong).
Shares in PCCW, controlled by Richard Li, fell as much as 7.3 per cent, bringing its losses this year to about 60 per cent. More than 84million shares changed hands yesterday, almost twice the daily average for the past three months.
The decline in share price "reflects disappointment that the company couldn't find cheap money to cover its short-term debt", said Kitty Chan, of Lippo Securities (Holdings).
PCCW spokeswoman Joan Wagner declined to comment.
Spokesmen for Morgan Stanley Dean Witter & Co, Barclays Capital Group, HSBC Holdings plc, and J.P.Morgan Chase & Co, which were hired to arrange the sale, also declined comment.
PCCW - which was to have sold the bonds through its PCCW-HKT Telephone unit - had planned to use the money to repay $US1.5 billion of loans maturing in 2004 and $US2.3 billion in 2006, borrowed to help fund its $US28 billion purchase of Cable & Wireless HKT.
- BLOOMBERG
This story was found at: theage.com.au |
