Appeal court judges yesterday denied Richard Li Tzar-kai leave to argue against its blocking of his HK$15.9 billion bid to privatise PCCW before Hong Kong's top court. Legal costs were awarded against the telecom and its parent company.
The companies now have the option of asking the Court of Final Appeal to hear the case. They have not said whether they will do so. The judges, Mr Justice Anthony Rogers, Mr Justice Johnson Lam Man-hon and Mr Justice Aarif Barma, will give reasons for their ruling later.
Four months ago the same judges overturned a lower court's decision to allow the parent company, Pacific Century Regional Developments (PCRD), and mainland telecom China Netcom Group to buy out minority shareholders in PCCW. They ruled that a shareholder vote on the deal had been manipulated by a PCCW shareholder handing out shares to hundreds of insurance agents, who then backed the buyout.
Following yesterday's ruling, Singapore-listed PCRD said it was considering its options. A PCCW spokesman said it would study the court's decision before commenting.
Chan Pang-ching, convenor of an alliance of PCCW minority shareholders, hoped the ruling would put a stop to the case, and urged PCCW's management to focus on business.
At the heart of the case is the use of a scheme of arrangement to privatise the company, under which the deal succeeds if a simple majority approves it at a shareholders' meeting and it is supported by holders of at least 75 per cent of company shares and opposed by holders of less than 10 per cent of the shares.
More than 70 per cent of privatisation deals in Hong Kong in the past five years have involved schemes of arrangement.
Jonathan Harris, a lawyer for PCCW, said the case was academic to the extent that the buyout offer had lapsed, but was important because it could raise questions of shareholder interest and 'issues the company will have to deal with in the future'.
Linda Chan, senior counsel for PCRD, said taking the case to the Court of Final Appeal would allow it to issue guidelines as to what can and cannot be done under a scheme of arrangement.
Winston Poon, senior counsel for the Securities and Futures Commission, one of the parties to the case, said a buyout must conform with public-law principles.