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Hutchison's mobile arm to appraise privatising bid

Hutchison Telecommunications International, which runs mobile-phone networks in Asian emerging markets, has formed an independent board committee to appraise parent firm Hutchison Whampoa's HK$4.23 billion bid to take it private.

The committee includes Hutchison Telecom's independent non-executive directors Kwan Kai-cheong and Kevin Westley, according to the company's filing with the Hong Kong exchange yesterday. Financial services firm Somerley has been named the committee's financial adviser.

The announcement marked another step in the process of privatising and delisting the unprofitable network operator, in which conglomerate Hutchison Whampoa has a 60.4 per cent shareholding.

Following rules under the city's Takeover Code, designed to ensure fair treatment of shareholders affected by merger or takeover transactions, the committee established to assess Hutchison Telecom's privatisation must include only its non-executive directors who have no direct or indirect interest in the buyout scheme.

Shares of Hutchison Telecom yesterday rose 0.47 per cent to HK$2.14, their highest close since hitting HK$2.43 on April 24 last year. Hutchison Whampoa was down 1.38 per cent to close at HK$57.25.

Li Ka-shing, the chairman of both Hutchison Whampoa and flagship firm Cheung Kong (Holdings), controls about 67 per cent of Hutchison Telecom through Hutchison Whampoa's stake and his personal holdings. In a joint announcement last week, Hutchison Whampoa offered to take Hutchison Telecom private for HK$2.20 a share, or about HK$4.23 billion.

The conglomerate's cash buyout offer, arranged by Goldman Sachs, represents a 37 per cent premium over its subsidiary's closing price on December 31 of HK$1.60.

Hutchison Telecom posted an unaudited HK$285 million loss in the first half of last year, compared with a HK$1.17 billion profit for 2008.

The network operator has been divesting strategic assets in Israel, India, Hong Kong and Macau over the past three years.

It currently runs loss-making start-up operations in Indonesia, Vietnam, Sri Lanka and Thailand, a market it plans to exit.

Financial research firm Moody's Investors Service said the offer to privatise Hutchison Telecom would have no material impact on Hutchison Whampoa's credit profile.

'The offer amount is well within the affordability of Hutchison Whampoa, which had cash [excluding equities] of HK$71 billion as of June last year,' said Elizabeth Allen, a Moody's vice-president.

A Hutchison Whampoa spokesman said the timetable for the takeover would be announced in a document that would be sent later to Hutchison Telecom shareholders and option holders.