Thu, Aug 03, 2006 - Page 11 News List

Chunghwa denies canceled sale

MIXED MESSAGES Chunghwa Telecom's board on June 20 approved a plan to sell abroad American depositary receipts, the second such offering in a year

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Chunghwa Telecom Co (中華電信), the nation's largest telephone company, denied canceling a plan to sell an 8 percent stake overseas because of interference from the government.

The company scrapped a US$1.5 billion plan after the Ministry of Finance intervened to ensure Chunghwa Telecom complied with rules on state share sales, the Financial Times reported on its Web site, without saying where it got the information.

Chunghwa last month invited investment banks to pitch to be advisers for the sale and the successful bank was to have been announced last week, the Financial Times reported.

The company canceled a plan to hire bookrunners after the ministry's intervention, Frances Chou, a company spokeswoman, said in a phone interview yesterday.

Chunghwa had contacted dealers directly, in contravention of established government rules that require it to publicly announce the planned sale 20 days before bidding for the issue takes place, Chou said.

Still, the sale will go ahead, according to Chunghwa Telecom chief financial officer Hank Wang (王漢朝).

"We hope to conduct it within one or two months," Wang said in a separate telephone phone interview. "Maybe the issue won't be delayed at all."

Chunghwa Telecom's board on June 20 approved a plan to sell American depositary receipts, the second such offering in a year, on behalf of the government which is selling off its stake in the former telecom monopoly to raise funds to cover rising debt.

The government owns 41 percent of Chunghwa Telecom's shares, after the telecom operator completed its privatization in August last year by selling a 17 percent stake both overseas and at home.

While Chunghwa Telecom is now a private company, the finance ministry is in charge of the offering and wants the sale to comply with government procurement rules, Wang said. The company will communicate with the ministry to solve any problems, he said.

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