Li Ka-shing Funded Son's Exit From Hong Kong's PCCW (Update2)
By Cathy Chan and Joshua Fellman
bloomberg.com
Sept. 21 (Bloomberg) -- Billionaire Li Ka-shing provided a HK$500 million ($64 million) deposit that enabled his son Richard Li to exit Hong Kong's biggest phone company, according to a statement by Pacific Century Regional Developments Ltd.
Francis Leung, a former Citigroup Inc. banker who is putting together a group to buy Richard Li's stake in PCCW Ltd., borrowed the money from Li Ka-shing and later returned it, according to a statement to the Singapore Stock Exchange today by PCCW's parent.
The loan was ``as a temporary source of financing for the payment of the HK$500 million,'' the statement said. Leung will pay a further HK$2.7 billion toward the HK$9.2 billion purchase in November, and the balance by the second quarter of 2008.
Leung's purchase of Richard Li's 23 percent stake came after state-owned China Netcom Group, PCCW's second-largest shareholder, blocked the proposed sale of the company's phone and media assets for more than $6.4 billion to either Australia's Macquarie Bank Ltd. or TPG-Newbridge, a Fort Worth, Texas-based buyout firm.
China Netcom, China's second-largest phone company, said it didn't want any major changes to the asset structure of PCCW, and wanted the company to stay in public hands. Netcom bought a 20 percent stake in PCCW last year for about $1 billion.
PCCW's shares have dropped 1.2 percent in the past year, compared with a 15 percent gain in the Hang Seng Index. The stock has shed more than 90 percent of its value since peaking in 2000.
Richard Li holds most of his PCCW stake through Singapore- listed Pacific Century Regional Developments Ltd., the shareholders of which will have to vote to approve the sale. Li controls about 75 percent of Pacific Century's shares.
Abstention
Li will have to abstain from voting on the sale if his companies or associates, including his father, finance the transaction, the statement said. Li Ka-shing controls Hutchison Whampoa Ltd., which operates mobile and fixed-line phone services in Hong Kong and other Asian cities.
The $500 million paid as a deposit in July was repaid after Leung obtained a refinancing loan on July 19, today's statement said. Details of the group being formed by Leung to finance the balance of the purchase aren't complete, it said.
Leung has been planning to form his own private equity fund after quitting his role as Asia Chairman of New York-based Citigroup in February. |
