| Bloomberg  PCCW Ltd. Chairman Richard Li failed to win approval from a Hong Kong court to appeal the ruling that blocked his HK$15.93 billion ($2.06 billion) buyout bid for the city’s biggest phone service provider.
The company’s application was declined by Judge Anthony Rogers at a Court of Appeal hearing in Hong Kong today. PCCW and Li’s Pacific Century Regional Developments Ltd. both said they haven’t decided whether to take the case to a higher court.
The ruling is a further setback for Li, who dropped his five-month bid to buy out PCCW after the appeal court ruled on April 22 that shareholder votes were manipulated. The company planned to appeal to clarify Hong Kong’s rules on takeovers and not to revive the deal, Jonathan Harris, the phone carrier’s lawyer, said.
PCCW’s proposed legal challenge will be “academic” because the buyout offer has “died,” Harris said at the hearing today. The case concerns issues that “directors consider it likely the company will have to deal with in the future,” he said.
More than 800 people registered as PCCW shareholders shortly before the Feb. 4 ballot to vote on the joint buyout bid by Li and China United Network Communications Group Corp., the Securities and Futures Commission, the city’s stock market regulator, said. This included several hundred agents at a formerly Li-owned insurer who were given PCCW shares by a manager, according to the commission.
‘Consider Options’
PCCW will study today’s court decision before deciding on possible further action, Harris told reporters after the hearing. Pacific Century said in a statement that it will “consider its options.”
“If the court grants them leave to appeal, it will be sanctioning the misfeasance of the directors,” Winston Poon, the commission’s lawyer, said at the hearing today. An appeal doesn’t serve the interests of PCCW’s shareholders, he said.
PCCW fell 13 percent from April 23 to May 6 after Li scrapped his HK$4.50 a share offer because of the court ruling. The stock started trading without the right to a HK$1.30 special dividend from May 7. The shares closed unchanged at HK$2.13 in Hong Kong today, compared with a 0.8 percent gain in the benchmark Hang Seng Index.
Li, 42, son of Hong Kong’s richest man, and PCCW have both denied any wrongdoing in the shareholder ballot.
The splitting and distribution of stock ahead of shareholder votes, while legal, can undermine the spirit of the law and amount to manipulation, Judges Rogers, Johnson Lam and Aarif Barma said in their May 12 written judgment for their April decision.
Fortis, Francis Yuen
An appeal against the decision will provide “guidance on what can and cannot be done with the shares,” Linda Chan, a lawyer representing Pacific Century, said at today’s hearing.
About 1,400 PCCW shareholders accepted the buyout offer at the ballot in February, compared with more than 800 against. Adoption of the plan required a majority of the investors participating in the vote, in addition to 75 percent of the shares represented.
Former Fortis Insurance (Asia) Co. executive regional director Lam Hau-hwa bought 500,000 PCCW shares and distributed them to about 500 people in January after phone calls with Francis Yuen, a business associate of Li’s, according to Winston Poon, the lawyer for the commission. Yuen and Lam both denied they participated in a plan to manipulate votes.
Pacific Century and Starvest Ltd., the Li-controlled companies that made the buyout offer, were ordered by Judge Rogers today to bear the commission’s legal costs. The two companies on Feb. 12 denied having “any knowledge of or involvement in any improper activities.”
Li, son of Cheung Kong (Holdings) Ltd. Chairman Li Ka- shing, said on March 8 that he didn’t ask anyone to buy shares to gather support for the buyout.
PCCW had “no knowledge of any improper share transfers,” the phone carrier said on Feb. 3.
The case is PCCW Ltd. et al. and Securities and Futures Commission, CACV85/2009, Hong Kong Court of Appeal.
To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it
|
Comments