The Hong Kong Stock Exchange has approved the bid by telecom conglomerate PCCW to spin off its telecoms units into a listed business trust, a deal worth up to US$3bn. The company has hired NM Rothschild & Sons to advise it on the transaction. In late…
The Hong Kong Stock Exchange has approved the bid by telecom conglomerate PCCW to spin off its telecoms units into a listed business trust, a deal worth up to US$3bn. The company has hired NM Rothschild & Sons to advise it on the transaction. In late March, the firm had said it might spin off its fixedline phone business and list it in the form of a business trust, warning that potential issues were being discussed with regulators.
Until now, Hong Kong has only allowed the listing of real estate trusts, but not of other business trusts. When the stock exchange quickly rejected the listing, PCCW appealed the decision in April. A business trust combines elements of a company with those of a unit trust, and is operated through a trustee manager. Investors in such a trust hold units rather than shares.
The transaction will only involve the disposal of a minority stake in the business, according to an earlier notice to the Hong Kong Stock Exchange. Forming the business trust will therefore allow Richard Li, media tycoon and chairman of PCCW, to raise money without giving up control of the fixed-line operations.
In a 2 June notice to the HK Stock Exchange, PCCW wrote: “Proceeds raised from the sale of stapled securities of the business trust as part of the listing transaction would be used both to reduce the indebtedness of the telecommunications group and to generate sums for the further development of PCCW’s growth businesses.”
China Mobile is interested in acquisitions in emerging markets such as Myanmar, chairman Wang Jianzhou was quoted saying. Speaking at a post-shareholder meeting news conference, he said that if the company breaks even in Pakistan next year, it will seek further overseas expansion. Since buying Paktel in 2007, China Mobile has invested some US$300m in the company.
Swedish equipment manufacturer Ericsson has completed an acquisition of assets from Guangdong Nortel Telecommunications Equipment Company (GDNT). SEB Enskilda acted as adviser to Ericsson, but no price was disclosed for the deal, initially announced in December. Ericsson said the deal would gain it R&D engineers, manufacturing and services professionals, as well as manufacturing and research facilities in China.
Mats H Olsson, president of Ericsson China & North East Asia, said: “The completion of this acquisition reaffirms our strong commitment to the [Chinese] market.”
Arc Capital Holdings (ARCH), a shareholder in handset retailer Funtalk, has announced the company is going to be privatised. This announcement confirms a previous Funtalk statement saying that a consortium of investors, which already control 77.13 per cent of the company, had offered to buy the remainder of the shares for approximately US$99m, or US$7.20 a share.
The group includes ARCH Digital, Capital Ally, GM Investment, Sinowill, Huge Harvest, Kingstate, and Trend Focus. The transaction is expected to be financed with a combination of debt and cash.
