2 Troubled Hong Kong Tycoons Get Good News
Mark Landler New York Times Service
Friday, September 7, 2001
HONG KONG For two of Hong Kong's most embattled tycoons, this week has brought a welcome respite from months of bad news.
Pacific Century CyberWorks Ltd., the struggling communications firm founded by Richard Li, reported its first profit since it acquired Hong Kong's flagship phone company, Cable Wireless HKT, last year.
The company's first-half net profit of 935 million Hong Kong dollars ($120 million) was a decided improvement over six months ago, when Pacific Century reported a loss for 2000 of 6.91 billion dollars, mostly because it wrote down the value of its Internet investments.
First half revenue totaled 11.31 billion dollars, up 12 percent on a pro forma basis. The results were slightly better than analysts' estimates and suggested that the company's darkest days might be behind it.
"The words 'cautiously optimistic' would probably describe our situation," said Mr. Li, 34, an entrepreneur whose reputation curdled from fame to infamy as his once high-flying company crashed.
A failed foray into cyberspace also singed Jimmy Lai, the outspoken media baron who owns Hong Kong's most popular newspaper, Apple Daily. But after a lengthy delay, the Hong Kong Stock Exchange is close to approving Mr. Lai's plan to sell his privately-held paper to his publicly-traded Internet company, Next Media.
The stock exchange had rejected Mr. Lai's previous application to seek a listing for Apple and its sister magazine, Next.
That stoked suspicion among his executives and allies that Mr. Lai was being punished by the Hong Kong authorities for his blunt criticism of China.
"Jimmy Lai is not popular among the tycoons in this town, and they have considerable representation on the stock exchange," said David Webb, editor of Webb-site.com, an online service that tracks Hong Kong companies.
Among those who have clashed with Mr. Lai is Li Ka-shing, who controls Hong Kong's container port, as well as a mobile-phone company and supermarket chain. Li Ka-shing who is the father of Richard Li, pulled his advertising from Mr. Lai's publications in response to their coverage of him.
More serious than Mr. Lai's feuds with business leaders were his attacks on mainland Chinese officials. In 1994, he wrote a column describing Li Peng, then the Chinese prime minister, as a "son of a turtle's egg." That made him an outcast in Hong Kong's commercial and political establishment.
Executives close to Mr. Lai said the stock exchange had made onerous demands of him, including a requirement that he personally put up a cash guarantee of $167 million to cover a potential shortfall in profits and the company's liability in pending libel suits against Apple and Next.
Such guarantees are often sought by the stock exchange, but executives close to Mr. Lai said the figure had exaggerated the potential damages from the litigation, while discounting the profits of Apple and Next.
Mr. Lai successfully appealed the rejection of his application, and the exchange's listing division forwarded the proposal to a committee of executives for a final decision, which could be announced Friday.
In an interview Thursday, Mr. Lai said a positive outcome would restore his faith in the city. "I never expected to be treated fairly in Hong Kong, with all these China-leaning tycoons," he said.
Mr. Lai said he wanted to inject Apple and Next into his public company to offset its losses from various print and Internet ventures.
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