HK Hutchison Telecom Set To Take Unit Private

HONG KONG (Dow Jones)--Hutchison Telecommunications International Ltd. (2332.HK) said Tuesday it is looking into taking Hong Kong unit Hutchison Global Communications Holdings Ltd. (0757.HK) private.

Analysts said the move will consolidate Hutchison Whampoa Ltd.'s (0013.HK) telecommunications interests in Hong Kong into one listed company and provide clarity for investors.

Hutchison Telecom has mobile telecom operations in emerging markets and Hong Kong as well as fixed-line and Internet businesses in Hong Kong through its 52.5% stake in HGC.

Both companies are listed and controlled by tycoon Li Ka-shing's conglomerate, Hutchison Whampoa Ltd. (0013.HK). Analysts said Hutchison Telecom's listing on Oct. 15 removed the need for HGC's public presence.

Hutchison Whampoa publicly listed Hutchison Global by the back door last year, by injecting its Hong Kong fixed-line business and broadband service into a company called Vanda Systems & Communications Holdings Ltd.

On the day the injection was announced Vanda shares shot up as much as 61% during the market session before closing 37% higher at HK$1.52. However, after the market closed that day, Hutchison Whampoa unexpectedly placed 2 billion Vanda shares at 90 HK cents a share, a 41% discount to the closing price. The shares dropped 31% the following day.

The transaction allowed Li to book a special profit of HK$1.3 billion, contributing to Hutchison Telecom's 2004 net profit of HK$72 million. Without the gain, Hutchison Telecom would have recorded a 2004 net loss of HK$1.228 billion in its first published results after listing.

"It makes sense to privatize HGC as investors' interest in the counter has waned after the listing of Hutchison Telecom," Phillip Securities strategist Y.K. Chan said.

Chan said HGC is likely to be taken private at below 90 HK cents a share. At HK$0.90 a share, the price would suggest a premium of nearly double the stock's current market price. HGC shares, suspended since April 26, last traded at HK$0.475.

HGC's shares have been trading mostly in a range between HK$0.40 and HK$0.50.

Hutchison Telecom's shares, suspended ahead of the announcement concerning HGC's purchase, last traded at HK$7.4.

No details on the move to take the company private were immediately available, but the company is planning a press briefing after the stock market closes Tuesday.

-By Julie Wang, Dow Jones Newswires; 852-2802-7002; julie.wang@dowjones.com

-Edited by David Riordan

(END) Dow Jones Newswires"

Posted to the site on 3rd May 2005