The public versus privatisation
The second of our two-part series on PCCW's privatisation row
When Richard Li Tzar-kai, chairman of PCCW, again announced a plan to privatise his telecommunications company, it was met with much speculation - not least because it would mean that Hongkongers who bought the stock when it was riding high would be forced to sell it for a fraction of the price they paid for it.
'I bought it when their shares were still high' says Janet Wong, a long-time PCCW investor who has watched the value of the stock drop from a dot-com-boom high of HK$131 nine years ago, to HK$3.98 on April 1, before trading was suspended.
But with share prices so low, a good argument - at least from a corporate point of view - can be made for buying back the shares the company does not own and going private.
'A private firm would have more flexibility in terms of strategy,' says Dean Xu, an associate professor at the School of Business at the University of Hong Kong.
'Rather than listening to opinions from a wide variety of shareholders, it gives authority only to management heads of the company. Not to mention that a lot of time is saved when making executive decisions.
'As a management professor,' continues Dr Xu, 'I would love to see this scenario. He [Mr Li] has a strategic vision that the public doesn't have, so it would be beneficial to the public to let him lead a company over which he has full control.'
But there are conditions to private ownership. PCCW cannot later sell its shares at a higher price, or try to withhold information from the public, as this would be an abuse of power.
In the meantime, many private investors are opposed to the buyout because they do not feel the price that PCCW is offering - HK$4.50 - is fair.
It's not hard to understand why long-term investors like Ms Wong are upset.
After watching her shares drop from more than HK$100 to HK$3.98, she now faces being forced to sell them at HK$4.50, which is hardly a bargain.
She argues that, if the company continues to be publicly traded, there is always a possibility that shares will rise in value again.
Another investor agrees, saying: 'They still have a chance to go up.'
If PCCW gets the go ahead to privatise - the High Court of Appeal was still considering the case as this story went to press - it will mark the end of a long saga. The fairness of the decision, whichever way it goes, is likely to remain controversial, however.
