Sat, Jul 19, 2003 - Page 10 News List

Chunghwa sale nets US$1.65 billion


Taiwan sold a 12 percent stake in Chunghwa Telecom Co (中華電信), the nation's biggest phone com-pany, to overseas and domestic investors, raising US$1.65 billion to help plug a budget deficit and finance spending to create jobs.

The government sold the equivalent of 965 million shares to overseas investors and 200 million to domestic buyers, the company and the Taiwan Stock Exchange Corp (證交所) said in separate statements. The price for both sales was at a discount of about 2 percent to Chunghwa's closing price yesterday of NT$50.

The sale, and a smaller stake sold in Taiwan's biggest chipmaker last week, helps curb a forecast NT$238 billion (US$6.9 billion) budget deficit as President Chen Shui-bian (陳水扁) prepares to seek re-election in March. The government sweetened the overseas sale, which was delayed for three years, by promising an NT$4 billion dividend, amounting to a yield almost eight times local one-year fixed rates.

"It looks cheap, with a very high dividend yield," said Chris Ruffle, whose US$260 million China Fund Inc. has previously bought Chunghwa's global depositary receipts.

Chunghwa shares rose NT$1, or 2 percent, to NT$51. The company's American depositary receipts rose 0.8 percent to US$14.35 on their first day of trading in New York.

The government sold 96.5 million ADRs, each representing 10 common shares, at US$14.24 each, Chunghwa said. The sale amounts to a stake of about 10 percent. Banks arranging the sale have an option to increase the offering by another 144.75 million common shares, the company said, rep-resenting another 1.5 percent stake.

In addition, the Legislative Yuan has given the government approval to sell as much as another 2.3 percent of Chunghwa Telecom overseas by the end of the year.

Investors in today's domestic auction of a 2 percent stake, conducted by the Taiwan Stock Exchange on behalf of the company, paid NT$49 (US$1.42) a share, the exchange said.

The sales pared the government's stake in Chunghwa to about 68 percent from 79.56 percent.

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