The shareholders of Hong Kong’s conglomerate PCCW have today approved the company’s plans to spin off and list its telecoms unit as a business trust.
In a statement, PCCW said that more than 99% of the shareholders voted in favour of the plan.
The…
The shareholders of Hong Kong’s conglomerate PCCW have today approved the company’s plans to spin off and list its telecoms unit as a business trust.
In a statement, PCCW said that more than 99% of the shareholders voted in favour of the plan.
The conglomerate recently said that it was expecting to generate up to HK$10bn (US$1.28bn) from the listing but added that the unit would need to achieve a minimum market capitalisation of HK$28.6bn (US$3.6bn) for the process to go ahead.
But PCCW’s own market cap is currently of HK$21.02bn (US$2.7bn), with some analysts quoted saying that the company may have been too optimistic regarding the expected valuation for the telecoms unit.
Today, the company added that the decision “as to whether or not to proceed with the proposed spin-off remains subject to market conditions and pricing.”
Proceeds from the transaction are expected to be used for debt repayment. PCCW also said in a filing with the Hong Kong Stock Exchange, in late September, that it would retain between 55% and 70% of the business trust following the listing, scheduled to take place in Q4 this year.
The disposal of a minority stake will therefore allow Richard Li, media tycoon and chairman of PCCW, to raise money without giving up control of the fixed-line operations.
This is the first time that Hong Kong allows the listing of a business trust, which 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.
