Phoenix Satellite Television is planning to sell shares at 91 HK cents to HK$1.29 each to raise HK$661.57 million to HK$937.83 million. Sources close to the sponsor said the pricing was based on 10 times the 2003 forecast cash flow, which gives an enterprise value of HK$480 million to HK$680 million. At this pricing level, Phoenix would have a market capitalisation of up to HK$6.24 billion. The sources said the target proceeds had been scaled back from the HK$779.3 million to HK$1.01 billion range due to changes in market conditions. 'The initial target was set two months ago, when the valuation of telecom, media and technology companies was much higher,' a source said. Phoenix, which expects to be in profit this year, plans to issue 727 million new shares, representing 15 per cent of its enlarged share capital. It lost HK$85 million last year and HK$131 million the year before. It plans to launch its initial public offering on June 21, with shares trading from June 30. Some analysts, however, think the stock is expensive compared with Television Broadcasts and i-Cable Communications. An Asian fund manager who attended a Phoenix group briefing said international investors had reservations about whether the company could maintain distribution rights in the mainland after Beijing's World Trade Organisation entry. 'Going forward, there are a lot of grey areas to be addressed. The tie-up with Mr [Rupert] Murdoch would not help in this case,' he said. He said Phoenix had less than 1 per cent mainland viewership, which made its case unappealing. Before the share offering, Star TV, a unit of Rupert Murdoch's News Corp, and company chairman Liu Changle each own 45 per cent of Phoenix. Bank of China International holds the remaining 10 per cent. After the flotation, the stakes held by Star TV and Mr Liu would be diluted to 38.25 per cent each. Bank of China International would end up with an 8.5 per cent holding.