Cable and Wireless Plc is planning to raise UKP400m from the sale early next year of part of its 80% stake in a new company formed by merging its Hong Kong interests. The new company, Hong Kong Telecommunications, comprising Cable and Wireless Hong Kong and the Hong Kong Telephone Company – C&W owns 80% of both – will be quoted on the Hong Kong stock exchange. Effectively, it will be created in two parts. First, shares in Hong Kong Telephone Company will be split and exchanged for shares in the Hong Kong Telecommunications. The new company will then purchase Cable and Wireless Hong Kong for shares. Cable and Wireless Hong Kong will represent 55% of the new group and the Hong Kong Telephone Company 45%. Even in its new guise, Cable and Wireless Hong Kong will continue to pay royalties to the Hong Kong government, while Hong Kong Telephone Company’s profits will still be restricted to 16% of its nominal shareholders funds. The current subsidiaries of the Hong Kong Telephone Co will be separated from their current parent but will be an integral part of Hong Kong Telecommunications. Cable & Wireless is planning to sell 5.5% of the shares in the new company in late January or early February next year. The move which will be accompanied by the Hong Kong government selling a similar amount – half its shares in Hong Kong Telecommunications – is in line with Cable and Wireless’s 1981 promise to make shares in Hong Kong telephone services more freely available. The UKP400m raised in Hong Kong is likely to be put to-wards expanding the Mercury Communications network and extending Cable and Wireless’s fibre optic net-work. At Thursday’s close, when the shares of Cable & Wireless Hong Kong and of Hong Kong Telephone Company were suspended, the new group was capitalised at UKP7,000m, but with markets tumbling from the 19th floor all around the world, it was a good time to have trading in one’s shares halted.
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