A senior Hong Kong judged has attacked the PCCW privatization as an "outrageous" for offering a $2 billion dividend to the buyers on completion of the deal.
The controversial $2 billion buyout by PCCW chairman Richard Li and mainland telco China Unicom is before the Hong Kong Court of Appeal to hear claims by the Securities and Futures Commission that the shareholders\' vote was rigged.
Court of Appeal judge Justice Anthony Rogers told the court Monday that he did not see the rationale behind the privatization, which offered shareholders a price way below what the shares normally traded at.
He said it was "outrageous" that Li\'s Singapore-listed firm PCRD and Unicom would get a $2 billion dividend after the deal was completed.
"People put their life savings [into PCCW] but they received nothing back," Rogers said, according to scmp.com. "This is a widows and orphans type of company "&brkbar; many people have put money into the company their whole life. The share price had gone down from the peak of HK$120 and it\'s pathetic."
"It is simply not good enough to buy out the shares at a price based on the last trading day before the announcement, which was the rock bottom price "&brkbar; 30% [less] than previous trading. Why‾"
Rogers said the HK$4.50 per share being offered to minority investors by Mr Li and his fellow deal-makers was "not the best thing since sliced bread, is it‾"
He said BOC International analysts also did not think the HK$4.50 offer was good enough and considered a price target of HK$5 was fair, while Morgan Stanley advised HK$5.30.
Another judge hearing the case questioned why the joint offerers chose a scheme of arrangement to buy out the firm, thus forcing minority shareholders to exit the company. He said that under the scheme minority shareholders were being forced out at a low price.