Minority shareholders of Pacific Century Premium Developments (PCPD) yesterday rejected a HK$2.64-billion privatization plan proposed by its parent firm, PCCW Ltd.

PCCW won't get another chance to bid on shares of its property arm PCPD for a year after a recent offer at HK$2.85 a share was rejected yesterday by minority shareholders. AFP

A total of 44.1 percent of the minority shareholders voted. Among them, 62 percent were against PCCW's proposal to buy the remaining shares it doesn't already own in the property unit.

PCCW, the city's biggest fixed-line company, controlled by billionaire Richard Li, proposed to pay HK$2.85 per share for 926 million shares - the 38.5 percent of PCPD it doesn't own.

Some shareholders who attended the meeting yesterday said the offer price is too low.

Analysts speculated that Elliott Capital, the hedge fund that holds a 16.11 percent stake in PCPD, may be among those against the deal.

Pacific Century shares dropped 2.5 percent to close at HK$2.76 on Wednesday before being suspended yesterday.

The shares have surged more than 20 percent since the buy-out plan was proposed in February.

"The shares of PCPD may slump when they resume trading," said Matthew Kwok, a research head at Tanrich Financial who expects the share prices to fall to HK$2.50.

Kwok said the price offered by PCCW is much lower than the net asset value (NAV) per share of PCPD.

"The NAV of PCPD is estimated to be HK$4.50 per share," Kwok said.

PCCW, which currently holds 61.53 percent of PCPD, isn't allowed to raise another privatization plan for a year after the failure. Kwok said it is unlikely for PCCW to attempt a backdoor privatization by buying PCPD's assets.

"Elliott Capital may vote down the proposal of buying assets," he said.

PCPD, the property subsidiary of PCCW, is the developer of the Bel-Air residential complex in Pok Fu Lam district.

It is also in talks to dispose of its interest in Pacific Century Place in Beijing.

"The firm's projects are mostly completed and cashed," Kwok said. "PCCW should raise its offer to HK$4 per share if it really wants the proposal to be passed next time."

The privatization plan was proposed on Feb 14. PCCW said in an announcement that it plans to buy out and delist PCPD since its share price has long lagged its NAV per share of HK$3.03. And its share performance has also lagged the Hang Seng Index since 2004.

(HK Edition 04/18/2008 page2)