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SMH report ... the cat is <b>out</b> of the bag ..

  1. rembrandt

    5,816 Posts.

    Hmmm... for those who thought Bob Mansfield was holidaying in HK ... we all thought he was hiding from Ziggy's dummy-spits over Richard A enforcing stricter reporting regime ... just goes to show the proposed 50% fixed-line rental increases (sending a cool $1billion straight thru to the bottom line) wasn't needed to fund the acquisition ...

    SMH report this morning ...

    "Telstra takes over HK mobile venture
    By Ian Verrender, Business Editor
    July 1 2002

    Telstra has swooped on its ailing Asian partner, Richard Li's Pacific Century CyberWorks, mopping up control of the Hong Kong mobile telephone joint venture in what appears to be a cashless transaction.

    The deal, nominally worth $US614 million ($1.09 billion), is expected to be announced this morning and should go some way to easing criticism of the Australian carrier's involvement with Mr Li, having invested $US2 billion with the controversial young businessman in October 2000.

    The bulk of that investment, at least $3 billion, was directed into a 60 per cent interest in the Regional Wireless Company, a Hong Kong mobile phone company.

    But less than a year after the deal, Telstra was forced to write down the value of its 60 per cent stake by $1 billion, a move that severely damaged the credibility of Telstra chief executive Dr Ziggy Switowski.

    The purchase of PCCW's 40 per cent stake in the mobile telephone business has been negotiated through a complex series of financial transactions.

    Mr Li's company will redeem the outstanding principal of $US750 million of a convertible bond issued to Telstra along with accrued interest and due in 2007 and will issue $US190 million in convertible notes to Telstra. The difference between the two transactions will be met by the transfer of PCCW's 40 per cent of the joint venture.

    Pacific Century CyberWorks has reeled from one crisis to another ever since it took control of Hong Kong Telecom (HKT) almost three years ago.

    It used the soaring value of its stock during the technology bubble to launch a $US38 billion cash and share takeover of HKT, which had been controlled by the UK's Cable & Wireless.

    But the cash component of the bid was financed almost entirely through a $US12 billion loan, the biggest ever in Asia at that time.

    The dot com bubble burst shortly after the transaction was completed and, in a desperate attempt to reduce its loan burden, PCCW in early 2000 lured Telstra into a joint venture arrangement that the Australian carrier believed would deliver the Asian presence it thought it needed.

    Despite pressure to renegotiate the deal on more favourable terms, Telstra finally stitched together a deal almost six months later that left most analysts dumbfounded.

    By the time the deal was signed, PCCW's shares had slipped from $HK26 to just under $HK8, there were clear indications the mobile phone company was losing market share in Hong Kong and the value of the connections of Mr Li, son of Hong Kong's wealthiest tycoon, in Beijing were being questioned.

    Since then, PCCW stock has plummeted, Mr Li's claims to holding a degree at Stanford University were proven to be false and the company has been forced to slash staff numbers.

    PCCW shares ended at $HK1.84 (42c) on Friday.

    The pair still own a separate joint venture, which owns a vast network of international cables. "

    This is only my view ... read the red stuff.

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