HONG KONG: PCCW sale rejected

http://www.asiamedia.ucla.edu/article-eastasia.asp?parentid=58727

HONG KONG: PCCW sale rejected
Vast bulk of PCRD's minority shareholders turn down deal

South China Morning Post
Thursday, November 30, 2006


Minority shareholders of Singapore-listed Pacific Century Regional Developments on Thursday rejected the sale of a controlling stake in Hong Kong telecommunications giant PCCW, a PCRD spokesman said.

The spokesman, who declined to be named, said 76.3 per cent of the votes cast were against the deal.

Votes were counted immediately after the meeting to discuss the sale, which lasted about one hour at the private Raffles Town Club, marking the culmination of a corporate and family saga involving Asia's richest man, Li Ka-shing.

The deal has been mired in controversy since Mr Li's son, PCCW chairman Richard Li Tzar-kai, announced earlier this year that he wanted to sell out, drawing bids worth as much as US$7 billion (HK$54.6 billion) from foreign investors for PCCW's core telecoms assets.

That sale option was vetoed by central government-owned China Netcom, PCCW's second-largest shareholder, which said the company should not be sold to foreign interests.

Amid dire warnings that such direct intervention by the mainland in Hong Kong's business affairs compromised its corporate governance standards, a close associate of Li Ka-shing stepped forward with a counter offer.

Francis Leung Pak-to, an investment banker, said in July that he would buy the 23 per cent controlling stake held by PCCW chief Richard Li's PCRD for HK$9.2 billion.

Li Ka-shing initially denied involvement in the deal but Mr Leung later revealed the elder Mr Li and Spanish telecom firm Telefonica would in fact be the main buyers.

The revelation sparked an apparent change of heart by Richard Li, who has long wanted to escape his father's shadow and he was quoted by Ming Pao last week as saying he would be pleased if PCRD shareholders rejected the deal.

Richard Li holds 75 per cent of PRCD but, because of his father's involvement, he cannot take part in the vote under regulations governing connected transactions, which left minority shareholders to decide the deal.

"Why should we give away the golden goose?" Edward Gay, a shareholder who said he would vote against the sale, told reporters as he arrived for the vote.

"They are making very good business" yet shareholders had not received "even a single cent" in dividends, Mr Gay said.

The meeting itself was closed to the press.

Date Posted: 11/30/2006