Third time unlucky for Richard Li
Richard Li\'s efforts to extract himself from Hong Kong\'s biggest telco have once more ended in failure.
The PCCW chairman called off his controversial plan to privatize the incumbent after the Hong Kong Court of Appeal effectively rejected the shareholder vote. Li and China Unicom planned to pay HK$15.9 billion ($2 billion) for the company, helped by a $257 million sweetener from shareholder funds on completion of the deal.
In a high-profile case brought by the Securities and Futures Commission (SFC), the appeal court agreed that vote-splitting had affected the February shareholder vote, overturning a lower court ruling.
Since Li\'s acquisition of Hongkong Telecom in 2000, the stock price has fallen 98%. Calling off the bid, Li said statement that litigation over the buyout had created \'an additional and unnecessary burden\' to PCCW and had been divisive to Hong Kong society. Li said he would let the HK$4.50 offer lapse and would pay shareholders a special dividend of HK$1.30 per share.
Li said in the statement that he had wanted to \'give minority shareholders an opportunity to exit for cash at a substantial premium to the market price.\'
He said he was sorry that minority shareholders have lost this opportunity, which the company still believed was the right course of action.
\'The debate and subsequent litigation have not only brought an additional and unnecessary burden to the company but have also been unnecessarily divisive to society.\'
While this latest chapter may have closed, Li still has on his hands an asset he can\'t sell.
The underlying problem is the Beijing government\'s refusal to let foreign players participate in China\'s telecom market.
Li could have sold the company to a private equity group in 2006 if Beijing had not exercised its veto through China Netcom, China\'s Unicom\'s predecessor on the share register. Rival private equity groups led by Macquarie Bank and Texas Pacific Group had offered up to $6 billion for Li\'s stake.
The national government quietly scuppered that one and tried to find a Hong Kong investor who would buy the company. None was willing.
Li and Netcom made another bid last year, offering HK$4.20 for the stock. Within days of Li calling time on the latest plan, the price was HK$3.31. In the wake of the court decision, speculation has swirled around Li and his role in PCCW.
Inevitably, he will try to sell it again, but who will buy‾
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