Chunghwa shares up for grabs

Taiwan will seek to offer stock worth US$895 million in Chunghwa Telecom Co Ltd (中華電信) through daily auctions, a new method to sell shares which have fallen nearly 40 percent since the government first sold a stake in the company last year.

The government will offer 480 million shares, worth about NT$30.5 billion (US$895 million) at yesterday's prices, in Taiwan's biggest phone company for half-hour periods on weekdays between today and June 20, Shen Fu-fu, the senior administrator in Chunghwa's investor relations department, said.

"If demand isn't there the sale will be closed early," Shen said. If demand for Chunghwa's shares exceeds supply then the government will sell more than 5 percent of the company's stock, she said.

The government, which needs funds to help plug a budget gap, has struggled to sell shares in the company domestically and overseas since it sold 2.8 percent stake of Chunghwa at NT$104 a share last year. They closed at NT$63.50, up 3.3 percent, yesterday.

Taiwan's government originally offered 15 percent of the company to local investors, finding buyers for less than a fifth of the shares available. Plans to sell more shares to overseas investors by the end of 2000 were delayed.

In January the government aborted an attempt to sell shares worth about US$2.8 billion at the time in Chunghwa to foreign investors after officials wouldn't accept the price they were offering for the stock.

The minimum price at which bids for Chunghwa shares will be accepted is likely to be the closing price of the shares on the days of the auction, Capital Securities Corp (群益證券), the sale's underwriter said.

Investors may not be interested in buying the new shares unless the government offers them at a discount to the current share price.

Shen said the government will set a minimum price at which it will accept bids for Chunghwa shares. The price will be announced at 3:30pm.

"To sell 5 percent of Chunghwa is a very tough thing," said Simon Chao, who manages NT$700 million (US$21 million) in Taiwan stocks at President Investment Corp (統一投資) in Taipei. "I don't think I will buy" unless Chunghwa's shares are offered at less than NT$40 each.

Investors expect Chunghwa's sales to fall this year from last because of competition later this year from three new fixed line companies, while mobile sales are expected to slow because government figures show more than 80 percent of the country's 23 million people have a mobile telephone.

Investors will have to apply to buy a minimum of 1,000 shares to be eligible to participate in the auction, Capital Securities said.

"Local investors aren't very interested" in buying Chunghwa shares, said Steven Hsieh, who manages NT$2.6 billion (US$76 million) in Taiwan stocks at Dresdner Asset Management Taiwan Ltd.