The tortuous saga of Richard Li’s (李澤楷) bid to take his Hong Kong telecoms firm PCCW (電訊盈科) private took another twist yesterday, as regulators said they had seized voting records from a meeting to endorse the deal.
Allegations of vote-rigging, economic nationalism and furious shareholders have made the delisting of the territory’s largest fixed-line operator one of Hong Kong’s favorite financial dramas over the past few years.
The story has been given added punch by a cast made up of one of Asia’s richest families, headed by Li’s father, Li Ka-shing (李嘉誠).
But the episode has raised fears it could damage the financial hub’s free market reputation, as it faces a string of controversies over corporate governance.
Following a sometimes raucous extraordinary general meeting on Wednesday, shareholders voted in favor of a bid by Li, PCCW’s chairman, and his partner China Netcom (中國電信) to take the firm private, the fourth time in three years Li has made the move.
But joy was tempered by the sight of officials from the Securities and Futures Commission (SFC) removing voting documents at the end of the meeting, in what could prove to be a last-ditch obstacle to the buyout.
“The SFC can confirm our staff were present at the PCCW meeting to monitor the voting process,” a spokesman said. “The SFC has taken possession of the voting records and will be making further inquiries. We do not have other comments to make at this stage.”
A spokeswoman for PCCW said the company would cooperate fully with the SFC investigation but would not comment further.
The document seizure came against a background of vote-rigging allegations by prominent shareholder activist David Webb.
Webb said earlier this week he had received an anonymous tip-off claiming hundreds of insurance sales agents were each offered one lot, or 1,000 shares, in PCCW in return for voting in favor of the buyout bid.
Webb said there was no evidence of any involvement by anyone at PCCW.
The privatization still has to be approved by the territory’s High Court later this month, and the SFC probe could provide a stumbling block.
PCCW shareholders were originally meant to vote on the HK$16 billion (US$2 billion) deal on Dec. 30, but voting was postponed at the last minute after Li upped the offer price amid strong opposition.
But even the new offer of HK$4.50 was not enough for some shareholders at the meeting on Wednesday, who have seen the share price drop from more than US$130 in 2000 at the height of the tech-stock boom.
“I’d rather throw my money into the sea than sell my shares to Richard Li,” said one female investor, surnamed Chan.
In 2006, Li made his first move to sell the firm he took control of in 2000, offering it to Australia’s Macquarie Bank and the Texas Pacific Group from the US.
But the deal was scuppered, reportedly with Beijing’s backing, over worries about a key asset falling into foreign hands.
Later that year, a group linked to Li’s father made another bid.
In an extraordinary move, the younger Li said he hoped the shareholders of the holding firm would reject the deal — which they promptly did.
Webb, a former director of the Hong Kong Stock Exchange, said he hoped the SFC investigation would help limit any damage to the territory’s reputation, but said wider issues needed to be addressed.
“Obviously it looks bad when vote-rigging schemes come to light but if regulators do their jobs right, as they have before [it could be a good thing],” he said.
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