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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (929)	4/2/2001 5:07:25 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

C&W to unload CyberWorks stake via bond issue REUTERS Embattled Internet and telecoms firm Pacific Century Cyberworks said on Monday it has reached a deal with significant stakeholder Cable & Wireless which it hopes will remove a huge overhang of shares from the market and help ease relentless pressure on its share price. CyberWorks, whose shares have been battered by fears the British company would dump its holdings amid the global tech and telecoms sell-off, said it would help C&W unload its 14.7 per cent stake in the firm through an exchangeable, zero-coupon bond issue. If the deal is completed by April 12, CyberWorks will release Cable & Wireless from a lockup that forbids C&W from selling half of its stake in the firm before August. If not, the lock-up for the second half of the stake will resume. CyberWorks said in a statement that the bonds would be exchangeable for shares of the company covering the British telecoms giant's entire stake. C&W said in London that the exchange price would be set within a range of HK$3.60 to HK$3.80 (about 46 to 49 US cents), and that it expected proceeds from the issue to total about US$1.5 billion. CyberWorks shares closed on Friday at HK$3.075. Trading in the stock was suspended on Monday prior to the market opening pending the announcements. The investment-grade bonds were targeted at institutional investors, CyberWorks chairman Richard Li told a hastily called news conference. UBS Warburg is the lead manager of the C&W bond issue. "This 15 per cent will be spread to different big funds, not to any strategic investors," he said. C&W, which sold control of the former Cable & Wireless HKT to CyberWorks last year in a US$28.5 billion deal, has been free to sell half its stake in CyberWorks since a lockup period lapsed in February, putting severe pressure on CyberWorks' stock price. Mr Li said the exchangeable bond deal was chosen because it would prevent C&W from dumping shares on the market. He said it may cause further volatility in CyberWorks shares over the next few days, but "for the medium and long term would be a milestone", because it represents a clear plan for disposing of the C&W stake. Waiting until the second lockup on C&W's shares in CyberWorks expired on August 21 would have dragged the overhang issue on too long. Fear that the British telecoms giant would dump the shares onto the open market has weighed heavily on CyberWorks' share price along with concern over its debt levels and souring sentiment toward tech and telecom shares in general. CyberWorks' shares have lost 39.11 per cent of their value since the start of the year, and are far below the HK$28.50 reached in February last year, which allowed the firm to buy the much larger Cable & Wireless HKT in Asia's largest-ever corporate takeover. Mr Li said the bond sale to institutional investors marked a change of direction for CyberWorks, which previously had been seeking a strategic partner, such as a telecoms firm, to take over C&W's stake. CyberWorks had failed to find such an investor, which many company watchers have said would have provided a welcome endorsement of the upstart company and its strategy. Mr Li said that in the end CyberWorks preferred the stake go to a stable base of institutional shareholders. "At last, we decided if we seek one or more strategic investors, that would be postponing the issue of the overhang. After we got this idea, we changed direction," he said. Mr Li also declined to say whether he personally would buy some of the C&W bonds. "In the meantime, I have not studied the possibility because we just finalised the arrangement," he said. technology.scmp.com