Chunghwa Telecom sells stake to ease central debt

ROADSHOWS: More than 625 million shares worth US$1 billion will be sold to mostly overseas investors, with the domestic component going up for auction


Tue, Sep 26, 2006 - Page 11

Chunghwa Telecom Co (中華電信), the nation's largest phone operator, said it plans to sell 625.4 million shares to overseas and local investors this week.

The shares are equivalent to a 6.46 percent stake valued at NT$34 billion (US$1 billion) based on the current stock price. Chunghwa Telecom is holding roadshows in Europe, the US and Asia until Friday, it said in a statement to the Taiwan Stock Exchange on yesterday, without giving more details.

The share sale will help the government, which owns 41 percent of Chunghwa Telecom, raise funds to cover debt. Chunghwa Telecom said on Sept. 17 that it selected Goldman Sachs Group Inc, UBS AG and Morgan Stanley to arrange an American depositary receipt (ADR) sale, after the company's board on June 20 approved the sale on behalf of the government.

Of the total, 505.4 million shares will be sold to overseas investors, and the remaining 120 million locally through an auction, the Ministry of Finance said on its Web site last Thursday.

The auction will be held on Thursday, the Taiwan Stock Exchange said in a statement on its Web site last Friday.

Shares of Chunghwa Telecom fell 0.2 percent to close at NT$54.8 on the Taiwan Stock Exchange yesterday. The stock has dropped 8.5 percent since the government first sold shares in the company on Aug. 9 last year.

The nation's TAIEX index gained 8.1 percent in the same period.

The government privatized Chunghwa Telecom by selling a 14 percent stake in the form of ADRs at a 0.5 percent discount to the price at that time, and about 3 percent in local shares.

The shares in the domestic auction this week are expected to be sold at a smaller discount than the 7.7 percent figure from the sale last year, the Chinese-language Commercial Times newspaper reported last Saturday, citing Vice Finance Minister Liu Teng-cheng (劉燈城).

Chunghwa Telecom said last month it plans to sell an 8 percent stake owned by the government and shareholder Taiwan Mobile Co (台灣大哥大) to overseas and local investors.

The sale would be of a 7.4 percent stake owned by the government and 0.6 percent held by Taiwan Mobile.