At PCCW's AGM on Thursday, investors voted against the general issue mandate by an estimated margin of 77.4% to 22.6%, or more than 3 to 1, the 6th index win for Project Vampire. A low turn-out may indicate how little interest this company now commands amongst institutional investors.

Vampire bites PCCW
27 May 2003

For the 6th time this season, investors in a Hang Seng Index company, this time PCCW Ltd (PCCW, 0008) have voted against the general mandate, as we show below.

For readers not familiar with it, Project Vampire (Vote Against Mandate for Placings, Issues by Rights Excepted) urges shareholders to vote against the general share issue mandate unless it complies with our recommendations, based on international best practice, which are:

  1. The mandate to issue shares for cash, other than by a rights issue, shall be in respect of not more than 5% of the issued shares a the time of the mandate
  2. The discount for shares issued other than by a rights issue shall not exceed 5%.
  3. The mandate to issue shares for other purposes, including acquisitions, shall be for not more than 20% of the issued shares

PCCW is about 32.81% owned by Singapore-listed Pacific Century Regional Developments Ltd (PCRD), which in turn is 75.25% owned by Richard Li Tzar-kai (Mr Li), Chairman of both. Another company controlled by PCRD, HK-listed Pacific Century Insurance Holdings Ltd, owns about 0.06% of PCCW, while Mr Li's private companies own about 3.82%. The executive directors of PCCW own about 0.09% between them.

Together, we estimate that Mr Li's interests and the executive directors amount to 1,711,942,919 shares, or 36.79% of the company. Assuming they voted in favour of their board's proposal, and deducting that from the votes "in favour" in the official poll results, then the voting of independent investors on the issue mandate was as follows:

  Votes Share
In favour 14,720,236 22.62%
Against 50,354,058 77.38%
Total 65,074,294 100.00%

In other words, public investors voted by a margin of more than 3 to 1 against the general mandate. Total votes cast were 2.21% of the free float, perhaps showing how little interest this company now commands amongst investors. Indeed, even Hutchison Whampoa Ltd, controlled by the Chairman's dad, apparently did not vote the 36.73m PCCW shares (0.79%) it held at 31-Dec-02, if it still holds them.

© Webb-site.com, 2003

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