Hong Kong's Securities and Futures Commission (SFC) is expected to ask a court today to block Richard Li's and China Unicom's PCCW buyout.
Lawyers for both parties convened yesterday in a heated session in the High Court, the FT said, with the regulator alleging that investors had distributed PCCW shares to an insurance firm in a bid to gain the required approval from 50% of shareholders and 75% of voting shares.
The SFC's lawyers argued that Richard Li's investment company PCRD had allocated PCCW shares to employees at Fortis insurance, and then pressured them to vote in favor of the privatization bid. They said this constitutes an abuse of the system.
PCRD lawyers said Fortis had issued the stock to employees as an employee bonus, adding that the regulator's own interviews with staff revealed that this was not an unusual practice at the insurance firm.
PCCW investors were entitled to distribute their shares as they saw fit, the lawyers argued, even if their objective was to gain more votes.
Li's offer to buy out and privatize PCCW for HK$4.50 ($0.58) per share was approved by around 60% of voting shareholders in February.