Failure of Chunghwa share sale addressed

The Ministry of Transportation and Communications will take responsibility if poor planning was indeed to blame for the pitiful outcome of state-run Chunghwa Telecom Co's (中華電信) domestic share sale, a senior official said yesterday.

Ho Cheng-tan (賀陳旦), vice minister, told lawmakers that "if the planning and timing of the share release was the main cause of its failure, then the ministry should bear the political responsibility."

Ho was careful to point out that poor market sentiment at the time was generally accepted as a major reason for the share sale failure.

But the transportation ministry's decision to set the share price so high -- NT$104 -- at a time when the market was performing badly has been cited by analysts as the main reasons for the dismal interest among domestic investors.

The statement came in response to a question from New Party lawmaker Hsieh Chi-ta (謝啟大) who asked who was to blame for the poor sale that had only managed to raise around NT$30 billion, far short of the projected NT$190 billion.

Hsieh accepted the blame, saying that Minister of Transportation and Communications Yeh Chu-lan (葉菊蘭) would likely have called for heads to roll over such an incident during her term as lawmaker.

The transportation ministry, which owns Chunghwa, last year only managed to sell around one fifth of the 1.5 billion shares offered to domestic investors and has postponed the overseas portion of the share sale.

Chunghwa had originally hoped to sell off 33 percent of the company in 2000 and another 33 percent this year. However a high share price of NT$104 and poor market sentiment sabotaged these plans and may lead to another offering to local investors, according to government officials.

Ho said that the ministry is attempting to stick with its schedule of completing the privatization of the company by year-end but that this timetable would be subject to market conditions, which can change rapidly.

However, Ho added that the setting of a floor price for the sale would also be subject to market conditions and "wouldn't necessarily be pegged at NT$104 per share."

Foreign investors have criticized the price as being too high and pressured the government to lower it for the overseas offering which will be in the form of American depository receipts.

Chunghwa closed yesterday at NT$61 per share.