Li offers to take PCCW private

The ongoing saga involving leading Hong Kong operator PCCW took a new turn on Tuesday as tycoon Richard Li offered to privatise the company under a $1.9bn deal.

In partnership with 20 per cent PCCW stakeholder China Netcom and Li’s other investment vehicle, Pacific Century Regional Developments (PCRD), Li is proposing to buy out minority shareholders for HK$4.20 (Eur0.42) per share – a 52 per cent premium on the price when PCCW suspended trading on October 14.

However, analysts suggest minority shareholders will balk at the deal, particularly as it includes a clause which states PCCW will pay a dividend of around HK$17bn to the new shareholders within 20 days of the transaction.

So while the deal may offer a route for smaller shareholders to exit, it looks like the privatisation pan would not cost Li a penny.

After the proposed deal, Li and PCRD will increase would hold 66 per cent of PCCW, with China Netcom holding the remainder.

Last month the Hong Kong operator abandoned plans to offload a 45 per cent stake in its newly founded quad play unit, HKT Group, as a result of the economic crisis.

Nevertheless, PCCW confirmed that it still plans to proceed with its previously announced reorganisation of its businesses under HKT. The company announced plans to consolidate its quad play offerings into a new company called HKT Group and offload 45 per cent of the operation in May of this year.