Wednesday 4th October 2006

Dear Reader,

A note on PCCW's new attempt to privatise Sunday. By proposing to acquire all its assets for cash and a promissory note in a connected transaction, and then to distribute the cash to minority shareholders if they approve the delisting, they are achieving a backdoor privatisation. This is an underhanded and brazen exploitation of the Listing Rules to avoid the privatisation procedures of the Takeover Code. It requires only a simple majority of the independent shares voted to approve the asset sale, but then those who objected to the previous privatisation (at the same price) face the choice of either taking the cash or blocking the delisting (which only requires 10% of the independent shares), in which case they will have shares in a cash shell, and the Exchange will then suspend the listing. Checkmate.

To close this regulatory arbitrage, the Listing Committee should amend the Listing Rules so that any sale which would leave a company as a suspended cash shell under the Listing Rules should require the same level of approval as a delisting.

Now on to the bigger picture...

NEW ARTICLE
Building a value proposition for HK (4-Oct-06)
HK Chief Executive Donald Tsang recently convened an Economic Summit of 33 people, which spawned 4 focus groups, including one on financial services, which in turn produced 3 working groups, one of which, headed by HKEx government-appointed director and Chairman Ronald Arculli, has sought submissions on the markets. This is our submission.
http://webb-site.com/articles/valueproposition.asp
 

RECENT ARTICLES
Commissions for Labour (27-Sep-06)
The HK Government seeks to increase its intervention in the private contract between providers and purchasers of labour services, by imposing requirements to include commissions in holiday pay. In a submission to the Legco Panel on Manpower, we urge the Government to step back and let the free market function.
http://webb-site.com/articles/commissionlabour.asp
 

PASS IT ON!
This free, no-spam newsletter goes to over 14,000 practitioners, issuers, regulators and investors in Hong Kong's markets. It's not-for-profit, so we depend on referrals. Invite a friend to subscribe! Click the link below:
https://webb-site.com/pages/refer.asp

Visit our archives, and do your due diligence homework before you invest:
http://webb-site.com/articles/

COPYRIGHT NOTICE
This e-mail and small extracts of any article on the site may be freely quoted in any other publication but ONLY if attribution is given to Webb-site.com.

____________
David M Webb
Editor, Webb-site.com
http://webb-site.com