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SCMP Reporter

Consumer telecommunications products maker CCT Telecom Holdings is proposing to raise a net $1.97 billion through a rights issue to fund an aggressive series of planned acquisitions and investments to help it become a leading mainland equipment manufacturer and services provider.

 The company, which recently saw Xinhua (the New China News Agency) buy a 12.5 per cent interest, is to make a one for one rights issue of not less than two billion new shares at $1 each.

 This is the fourth time the company has staged a fund raising exercise since April.

 Between April and July it raised more than $270 million from two convertible bond issues and one issue of shares to Xinhua.

 The subscription price of the rights issue represents a steep 64.9 per cent discount to the shares' closing price of $2.85 on August 21 before they were suspended on Friday.

 Chairman and substantial shareholder Clement Mak Siu-tong, who controls 22.4 per cent, and managing director Bankee Kwan Pak-hoo, who controls 2 per cent, have agreed to take up their entitlements under the issue.

 It is not known whether Xinhua will take up its entitlement.

 The remaining 75.6 per cent is being underwritten by Citicorp International, Kingsway SW Corp Finance, Yamaichi International (HK), J&A Securities and Peregrine Capital. Mr Kwan said the move was designed to prepare for an expected telecom boom in the mainland in the coming years.

 'We believe that the telecoms market in the mainland is set for impressive growth . . . CCT has thus resolved to capitalise on the high growth potential offered by the telecoms industry.

 'We are already in preliminary negotiations for several potential projects and are confident that these projects will be crystallised in the near future,' he said.

 In July, CCT struck a deal with Tesonic International, a firm associated with the Ministry of Electronics Industry, to distribute telecommunications equipment, provide network consultancy and services to the mainland's satellite industry.

 Investment in the project will be $220 million, with CCT contributing $132 million.

 Of the funds raised in the rights issue, CCT plans to use $900 million to set up joint-venture companies in the mainland to make telecoms products and to develop digital mobile telephone networks.

 About $250 million will be deployed to acquire interests in telecom product manufacturers in Asia.

 A further $200 million will be spent on research and development on technical know-how for establishing digital mobile telephone networks.

 It will spend $100 million to expand the marketing network in the US and Europe.



CCT rights issue to raise $1.97b for acquisitions and investments