Hong Kong Phone Merger Gets OK

AP Online
07-03-2000
Hong Kong Phone Merger Gets OK

HONG KONG (AP) -- Shareholders of Hong Kong's oldest telephone firm, Cable & Wireless HKT, approved its merger plan Monday with Internet investment group Pacific Century CyberWorks Ltd., clearing another hurdle for Asia's biggest telecom merger.

Cable & Wireless HKT Chairman Brian Smith said 99.9 percent of minority shareholders voted in favor of the union, based on the value of their shares.

Its parent, London-based Cable & Wireless PLC, controlling 54 percent of the Hong Kong firm, voted earlier for the deal.

Other major shareholders, including China Telecom, holding 10.8 percent, and the Hong Kong government, holding about 7 percent, also approved.

Pacific Century Cyberworks shareholders approved the deal last month.

Pending approval at a hearing on July 25, viewed largely as a formality, trading in shares of Cable & Wireless HKT will be suspended on Aug. 1 and the merger will be complete on Aug. 10, when the phone firm's stock is withdrawn from listing on the exchange.

Trading in shares in the new entity, to be called PCCW-HKT, will begin Aug. 15, said David Prince, Cable and Wireless HKT's deputy chief executive.

PCCW, owned by Richard Li, the billionaire son of Hong Kong's wealthiest man, Li Ka-shing, beat rival Singapore Telecommunications Ltd. in a deal valued at $36 billion to $38 billion in cash and stock when it was announced in late February.

The new company was valued at $37.2 billion based on closing prices Friday, said Simon Smith, the phone company's investor relations manager.

PCCW will pay Cable and Wireless HKT shareholders either 1.1 of its own shares for each share of the phone company, or 0.7116 PCCW share plus 93 cents per share.

A pending tie-up between PCCW and Australia's dominant telecom firm, Telstra Corp., will close before Aug. 10, helping reduce PCCW's debt level to $5.5 billion from $6 billion after the merger, Prince said.

In April, Telstra agreed to pump $3 billion in cash into PCCW to form two separate ventures with PCCW, pooling the mobile and cable assets of Telstra and Cable & Wireless HKT.

If all HKT shareholders opt for the cash-and-stock offer, CyberWorks would hold 36.4 percent of the new entity, while Cable & Wireless PLC's stake would amount to 19.7 percent.

PCCW hopes to expand its broadband network in Asia and began offering this month an Internet portal and interactive TV service, called Network of the World, through a set-top cable box. It also has stakes in a host of Internet-related companies.

Cable & Wireless HKT, once Hong Kong's local and long distance monopoly, has been suffering under the government's efforts to liberalize the telecom market.

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