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To: DaveMG who wrote (202)	8/19/1999 1:28:00 PM
From: DaveMG	Read Replies (1) \| Respond to of 426

China Unicom listing seen delayed Thursday August 19, 6:00 am Eastern Time By Matt Pottinger BEIJING, Aug 19 (Reuters) - China's number two telephone company is running short of cash due to a stand-off with foreign investors and will postpone a planned listing until it is resolved, foreign industry executives said on Thursday. One well-informed executive said the China Unicom listing planned for Hong Kong, and possibly the United States, in October may be delayed by six months. But at the same time, the size of the listing may be increased from $1.0 billion to $5.0 billion, said the executive, who declined to be identified. ``The real deadline is next April,' he told Reuters. ``The goal is $5 billion.' Unicom Executive Vice President Wang Jianzhou, contacted by telephone, declined comment. ``I can't say anything about that,' he said. Executives for underwriter Morgan Stanley Dean Witter also had no comment, citing securities regulations on disclosure. Set up in 1994 to challenge the then monopoly of China Telecom, China Unicom stumbled along for years with only lukewarm sponsorship from Beijing. Starved for cash, it turned to overseas investors. To skirt a prohibition on foreign ownership in domestic telecoms operators, companies including France Telecom , Bell Canada (Toronto:BI.TO - news), NexTel (Nasdaq:NXTL - news) and Sprint (NYSE:FON - news) set up ventures with Chinese companies which in turn invested in Unicom. But last year Beijing declared the scheme -- called China-China-Foreign (CCF) ventures -- ``irregular' and ordered Unicom to unwind the contracts. The move froze $1.4 billion in investment from more than two dozen foreign companies which put money into Unicom's mobile phone, paging and fixed-wire networks. China Unicom has offered to repay the investments with interest to some companies. It has settled with a few, and on Wednesday announced a deal with Japan's Nippon Telegraph and Telephone . But several foreign companies have banded together and demanded equity in Unicom or buyout packages that take into account lost potential revenues and the costs of supporting the networks -- figures two or three times the initial investments. Some are threatening to try to block Unicom's listing by complaining to securities watchdogs in their countries. ``I think without resolving CCF it's going to be incredibly difficult' for Unicom to list, said Edison Lee, an analyst with Credit Lyonnaise Securities Asia in Hong Kong. ``If you try to take the CCF ventures out of the IPO, then what's left in Unicom is actually very, very little. It will become very unattractive to investors,' Lee said. Executives familiar with Unicom say the company is having trouble expanding, let alone finding funds to buy off CCF partners. ``Unicom does not have access to capital,' said one foreign partner with a CCF joint venture. ``It has promises, but little success at raising capital.' ``They have a large bank line that's been set aside for them by the Bank of China, but they are not able to draw down on it or they're not willing to draw down on it' until the CCF issue is resolved, said a Western industry executive. Unicom's headquarters in Beijing told branches they would have to rely on local bank loans from July 1, according to industry analysts who say local banks have largely refused to extend credit. Analysts say Unicom's best hope will be to convince CCF partners to restructure their investments as loans or leases, or accept softer buyout offers -- a plan which could work for at least a few of the foreign companies. ``We don't want to burn our bridges' over the CCF issue, said the head of a Western telecommunications firm. Copyright ¸ 1999 Reuters Limited.