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Securities regulators launch deal vote probe

HONG Kong's securities regulators have launched an investigation into a controversial vote by shareholders to approve a US$2-billion deal that would take leading phone company PCCW private, officials said yesterday.

The buyout offer, led by state-owned China Netcom and PCCW Chairman Richard Li, earned more than 75 percent support from stockholders in Wednesday's vote, said a PCCW spokesman.

Amid speculation the vote was rigged, Hong Kong's market watchdog, the Securities and Futures Commission, attended Wednesday's shareholder meeting to monitor the ballot and seized voting documents afterward.

"The SFC has now taken position of the voting records and will be making further inquiries," a commission statement said.

The deal, worth 15.9 billion Hong Kong dollars (US$2.04 billion), would pay stockholders HK$4.50 for each share, giving Li and Netcom majority ownership and allowing them to take the company off the Hong Kong stock exchange. The company's stock, which once traded over HK$100 during the dot-com boom, last traded on Tuesday at HK$4.17.

Shares in PCCW, which runs fixed-line, mobile phone, broadband and broadband TV services, were suspended from trade on Wednesday.

The bid represents Li's latest attempt to either reform or drop out of PCCW, a floundering business venture that never quite lived up to its aspirations of becoming a regional high-tech powerhouse.

Li, nicknamed "Little Superman" after his billionaire father Li Ka-shing, who's known as "Superman" for his business acumen, has tried to sell PCCW's core telecom and media assets several times. After changing his tack last year, he was forced to sweeten his initial offer.

However, even the most recent deal has drawn intense criticism from some minority shareholders and analysts who have accused Li of drastically undervaluing the company.

The ballot itself was marred by allegations some were secretly offered shares in exchange for backing the buyout offer.


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