Published February 3, 2009

PCCW shares suspended on activist's claim

	Email this article
	Print article
	Feedback

(HONG KONG) Trading in PCCW shares was suspended yesterday after a shareholder activist reported to regulators an alleged scheme to offer shares of the telecoms firm to insurance agents as a reward for supporting its buyout offer.

Mr Li: Offering, with 2 shareholders, to buy PCCW for HK$4.50 a share

PCCW said in a statement that trading in the shares was suspended 'due to speculative press reports over the past few days which the company believes may potentially be price sensitive'.

A PCCW spokeswoman declined to comment further.

Local shareholder activist David Webb said on his website that he had reported to government regulators an alleged scheme to offer shares in the telecoms company to insurance agents as a reward for supporting the company's buyout offer.

'We are aware of the complaint,' said a spokesman from the territory's securities watchdog Securities and Futures Commission (SFC). He declined to comment further.

Mr Webb, a Hong Kong-based corporate governance commentator, said in an article dated Feb 1 that he had notified the Independent Commission Against Corruption and the SFC on Jan 15 about the alleged PCCW scheme that he learnt about through an anonymous e-mail message.

The alleged plot involves hundreds of Fortis Insurance sales agents who are being offered 1,000 shares of PCCW in return for signing a proxy form to support PCCW's US$2.2 billion privatisation plan. They would each get HK$4,500 (S$880) if the proposed privatisation succeeds, said Mr Webb.

PCCW shareholders will meet tomorrow to discuss the buyout, which has faced fierce opposition from minority shareholders.

'It is incredibly unlikely that several hundred people, most of whom happen to work for the same company, would separately, simultaneously and independently decide to transfer the same number of shares into their own name,' said Mr Webb in the article.

Fortis Insurance Company (Asia) Limited was formerly known as Pacific Century Insurance Holdings (PCI).

In 2007, Pacific Century Regional Development (PCRD), controlled by PCCW chairman Richard Li, sold its controlling stake in PCI to Fortis Insurance for HK$3.53 billion.

Last November, Mr Li and PCCW shareholders China Netcom and PCRD offered to buy PCCW for HK$4.20 per share, or HK$15.94 billion.

The offer was sweetened in December to HK$4.50 per share in a bid to win over angry minority investors who felt the price should be much higher.

Mr Li has repeatedly tried to sell his slice of Hong Kong's dominant fixed-line telecoms provider but has been thwarted by shareholder resistance and weak equity markets.

Shares of PCCW, which fell 20 per cent last year, rose 8.9 per cent in January to end at HK$4.03 on Friday, well below the buyout offer amid scepticism that the deal would go through. -- Reuters