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

To: ms.smartest.person who wrote (1948)	10/3/2001 2:34:09 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

The Great Debate: Volcker referees the fight over global accounting standards. THE PRICE OF OPACITY How much does lack of disclosure add to risk premiums? Hard to say. But the pricing of mergers and acquisitions in Asia provides an inkling. Buyers of Asian companies protect themselves from nasty accounting surprises by building a kind of safety valve into merger contracts. "Often the seller is required to give a warrant that guarantees a given net asset value at the time of closing," says Francis Yuen, deputy chairman and head of finance at Pacific Century CyberWorks, a Hong Kong acquisition firm whose most recent deal was the U.S.$28 billion buyout of Cable & Wireless HKT, the major Hong Kong phone company. He adds, "If the net asset value is less than the stated amount, there's a 'topping off.'" Examples of this are rarely aired in public. However, an investment banker at UBS Capital in Singapore, which specializes in leveraged buyouts, says that it is standard in his deals, and that he has seen price adjustments as high as 50 percent, in one dramatic case. Typical problems: unanticipated losses on receivables and other liabilities. No wonder audits in Asia can last as long as six months. While accounting revelations ended Ford's deal with Daewoo, others have been completed despite such skeletons. The deal San Miguel Corp., a Philippines brewer, did with Sugarland, another beverage company, is a recent example. After sending in an in-house audit team to look at Sugarland's receivables, then-CFO Alberto de Larrazabal renegotiated, stripping the troubled assets and paying U.S.$76 million, mostly in San Miguel shares, for the rest. --T.L. CFO Magazine Dec 01, 2000 cfo.com\|1\|AD\|1344,00.html