PCCW take-private bid under investigation

The telecoms company, eyed by private equity firms in the past, is under investigation for vote-rigging allegations, after shareholders recently voted to delist the company.

Hong Kong’s market regulator, the Securities and Futures Commission (SFC), has seized the records of telecoms provider PCCW’s privatisation vote and is investigating alleged attempts to affect the outcome of the vote.

PCCW is “making inquiries into this matter but can confirm that it has no knowledge of any improper share transfers made by any shareholders,” according to a statement from the company.

The High Court in Hong Kong will hold a hearing near the end of February to decide whether or not to approve the privatisation proposal, according to a PCCW spokeswoman. However, SFC’s investigation could potentially delay or scupper both Richard Li’s and state-backed telecoms business China Netcom’s efforts to delist the company.

Li, who is also PCCW’s chairman, has tried to sell the company’s assets before. In October 2008, PCCW cancelled a $2.5 billion auction of a 45 percent stake in HKT, its information technology, telecoms and media unit, citing unattractive offers. Private equity firms MBK Partners, Macquarie, Providence Equity Partners and TPG were reportedly in the running for HKT.

In early February 2009, minority shareholders representing roughly 51.3 percent of PCCW voted to take the company private.

A meeting this January, where shareholders were expected to reject Li’s and China Netcom’s original offer of HK$4.20 ($0.54) a share was adjourned after the bidders upped their offer to HK$4.50 per share. The new offer raised the deal size from HK$15.5 million to HK$16.6 million for approximately 52.2 percent of the company’s shares.

Li, who made his bid through holding company Pacific Century Regional Developments, and China Netcom are two of PCCW’s largest shareholders

PCCW’s shares were trading at HK$4.05 per share at time of press.