Try the new FT.com

Last updated: July 25, 2006 5:08 am

Hitch over sale of Li’s PCCW stake

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

The proposed sale of a controlling stake in PCCW by Richard Li to a Hong Kong investment banker is expected to be delayed following protests from Singapore’s leading shareholder group.

Mr Li’s Pacific Century Regional Developments, the holding company that owns the PCCW stake, says it will first hold a vote next month on a separate offer by TPG Newbridge, the US private equity fund, to buy out the minority shareholders of PCRD. Depending on the result of this vote, PCRD will decide whether to proceed with the sale of its 23 per cent stake in PCCW to Francis Leung.

PCRD investors are expected to use the vote to try to extract concessions from Mr Li over the PCCW deal, which has been criticised for ignoring the rights of minority shareholders. Mr Li, who holds 75 per cent of PCRD, will abstain from the vote.

TPG Newbridge first lodged its offer to buy out the 25 per cent stake of PCRD held by minority shareholders in January.

The proposal was eclipsed by a separate takeover battle for the core telecoms and media assets of PCCW, Hong Kong’s dominant telecom company, which again involved TPG Newbridge as well as Australia’s Macquarie group.

After objections from PCCW’s other major shareholder, China Netcom, to foreigners controlling the Hong Kong telecom company, Mr Li decided to sell PCRD's stake in PCCW to Mr Leung for HK$9.2bn ($1.18bn).

But the Securities Investors Association of Singapore last week warned it might mount a legal challenge if PCRD proceeded with the PCCW sale without first allowing minority shareholders to vote on the earlier TPG Newbridge offer.

PCRD on Monday denied it had violated Singapore's takeover rules by accepting Mr Leung's offer even before voting on the TPG Newbridge bid. Takeover law requires a company to keep its assets intact until shareholders have had a chance to vote on any existing offers.

TPG Newbridge offered to buy out PCRD minority shareholders for 30½ Singapore cents a share, close to its current share price. Minority shareholders could use the vote to demand a higher payout for the PCCW deal.

Both PCCW and TPG Newbridge declined to comment on Monday.

But a Macquarie executive criticised the way the bank’s $7bn-plus offer for PCCW’s assets was brushed aside. Beijing is believed to have thwarted a potentially lucrative bidding war for PCCW’s core assets, fearing a “strategic” industry would fall into foreign hands. In an interview with the South China Morning Post, Simon Murray said the outcome was “not that great for Hong Kong Inc’s image”.

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE