PCCW - reverse stock splitt

PCCW Announces Share Consolidation

Hong Kong / New York, December 6, 2002 - PCCW Limited today announced that it proposes to consolidate every five ordinary shares of HK$0.05 each in the capital of the Company into one ordinary share of HK$0.25 in the capital of the Company subject to approval by the company’s shareholders.

On consolidation, the existing board lot of 1,000 shares for trading on the Stock Exchange of Hong Kong will remain unchanged.

At the time of this announcement, the authorized share capital of the company is HK$1,600,000,000 divided into 32,000,000,000 shares, of which 23,268,769,346 shares are in issue. Immediately after consolidation, the authorized capital of the company will remain at HK$1,600,000,000, but will comprise 6,400,000,000 new shares of which not less than 4,653,753,869 will be in issue. This figure will be adjusted to account for any shares issued between today and the date of consolidation.

PCCW also has securities in the form of American Depositary Receipts  (ADRs) listed on the New York Stock Exchange. Each ADR represents ten shares. On the consolidation becoming effective, the outstanding ADRs will be consolidated in order to mirror the consolidation in Hong Kong.

It is proposed to achieve this by exchanging every five outstanding ADRs for one new ADR. The new ADR would represent ten new shares.

PCCW Group Chief Financial Officer Alex Arena said: “This initiative benefits our shareholders and the company. The consolidation gives our shareholders an interest in a company which has a traded value in line with the current valuation of comparable stocks.”

In addition, PCCW’s Board of Directors has proposed to amend the company’s Articles of Association principally to facilitate a number of changes in the manner of communicating with shareholders. These proposals include:



         ·§giving shareholders the right to choose how they  receive or access communications from the company;
         ·§giving shareholders the option  to receive summary financial reports instead of full reports; and
         ·§giving shareholders the option to receive communications from the company in English, Chinese or, if they want, both.

“The proposed changes to our Articles of Association will make PCCW, and its financial information, far more accessible and give shareholders company information in a format that they want, when they want it,” Mr. Arena said.

Both the proposed consolidation and the proposed changes to the Articles of Association are conditional on the approval of the company’s shareholders at an Extraordinary General Meeting, scheduled for January 7, 2003.

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About PCCW

PCCW Limited (SEHK: 0008, ADR-NYSE: PCW), the Hong Kong-listed flagship of the Pacific Century Group, is one of Asia's leading integrated communications companies.  From its market-leading position in Hong Kong, PCCW is focused on building shareholder value by leveraging synergies between its core businesses and partners, and by delivering total solutions to customers throughout Asia.  PCCW provides key services in the areas of: integrated telecommunications; broadband solutions; connectivity; narrowband and interactive broadband (Internet Services); business e-solutions; data centers and related infrastructure.

To learn more about PCCW, visit www.pccw.com
 

In the joke news of the day, PCCW said it plans to carry out a five to one share consolidation in what we see as a cheap bid to boost its share price and regain a semblance of respectability. It will not deserve respect, however, until it has earned it, and that will be hard under its current tutelage.

There are currently a bit over 23 bln shares in issue (authorized capital is HK$1.6 bln, or 32 bln shares), but after the consolidation there will be 4.653 bln shares outstanding out of a total 6.4 bln authorized. A consolidation would also affect the ADRs, which currently trade at 1 ADR per 10 ordinary shares, replacing every five existing ADRs with one new and improved ADR, maintaining the 1:10 ratio.

Before today's massive sell-down, the adjustment would have resulted in an increase in the per share price from HK$1.44 to HK$7.20.

Clearly the share consolidation does nothing fundamentally except take the share out of the realm of penny stock, possibly making it more attractive for international investors with short memories. It perhaps could also set the scene for future fund-raising as the share price would appear more substantial. This is nothing more than a cheap trick, more smoke and mirrors by a company known for that, and it cannot change one's fundamental view of its management or its business future.

- PCCW (8) dropped $0.15, 10.42%, to $1.29
 

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