HKT pushes back timing of takeover deal

Cable & Wireless HKT yesterday confirmed that its has delayed indefinitely the process of getting shareholder approval for its proposed takeover by Pacific Century CyberWorks.

The Hong Kong telecommunications carrier backed off from tentative dates given earlier for submitting its recommendations to shareholders -- May 20 -- and for holding an extraordinary shareholders meeting, which was to take place on June 26.

The delay puts off further the day of reckoning for a deal that could put upstart Internet firm PCCW on the map as one of Asia's major broadband Internet providers. The company plans eventually to serve all of Asia with multimedia Internet content.

An HKT spokesman, who declined to be named, confirmed in an interview yesterday that there is no firm date for the board to give its recommendation to shareholders.

"We cannot tell you the exact date of (the submission) because we need for some legal procedures to take place," the spokesman said.

HKT has presented its recommendations to a Hong Kong court for review and must receive clearance before it can present the documents to shareholders, the spokesman said.

"Right now we have to wait for the court to allow us to send the recommendations to shareholders," he said.

UK-based Cable & Wireless PLC, majority owner of HKT, has set an extraordinary shareholders' meeting June 13 to vote on the deal.

HKT's announcement of a delay is not a major cause for concern, according to Kary Sei, an analyst at Sassoon Securities, in Hong Kong, who follows PCCW. Most important is PCCW's stock, Sei said.

PCCW's share price has plummeted since the takeover agreement was announced in February, raising concern among some observers that shareholders may reject PCCW's offer.

"If the stock drops below HK$13, it's likely the UK shareholders will not accept," Sei said. PCCW was trading late on Monday at HK$13.75.

Singapore Telecommunications (SingTel), which saw an earlier bid for HKT rejected in favour of local bidder PCCW, may step in with another offer, Sei said. However, SingTel's recent experience should serve to teach the company to line up a partner, according to Sei and other analysts. Majority held by a Singapore government-backed holding company, SingTel has been rebuffed by both HKT and Malaysia-based Time Engineering Bhd. amid rumours of local political resistance.

"They want to expand out of Singapore, so from what they experienced in Hong Kong or Malaysia, they will find partners before they make another bid," Sei said. In bidding for HKT, SingTel probably would look to a mainland China partner, he said.

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