Cable & Wireless To Unload PCCW Shares

Hong Kong — Telecoms operator PCCW has announced that minority shareholder Cable & Wireless Plc. will unload its remaining 14.7 percent stake in the company through a convertible bond issue.

Cable & Wireless hopes to sell zero coupon bonds if its entire stake of PCCW, amounting to around 3.3 billion shares, to institutional investors.

A minimum exchange price of 3.60 Hong Kong dollars (46 cents) per share has been set. If not exchanged, the bonds are to be redeemed at par on June 9, 2003, when they mature.

Fears that Cable & Wireless would dump it’s stake in PCCW on the open market following PCCW’s announcement late last week of consolidated losses of HK$6.9 billion for 2000, have brought downward price pressure to bear on PCCW’s stock.

This move is widely seen within the industry as a way for PCCW to bring up its beleaguered stock price.

Last August PCCW Chairman Richard Li had engineered Asia largest corporate takeover to date by purchasing Cable & Wireless Hong Kong Telecom from its UK parent. The takeover was achieved mainly through stock and equity swaps with Cable & Wireless Plc. receiving a 20.2 percent stake in PCCW.

There are several lock-up periods for Cable and Wireless to sell any stock. Previous sales of PCCW stock by Cable & Wireless have depressed PCCW stock by as much as 20 percent.

With the new arrangement, PCCW looks to be able to remove the ability of Cable & Wireless stock sales to affect PCCW ‘s stock price.

Prior to the announcement, the trading of shares of PCCW was suspended. Trading is expected to resume tomorrow.

PCCW shares closed last Friday at HK$3.075.