HKT Trust and its operating arm HKT, which comprise the telecommunications assets under Richard Li Tzar-kai's PCCW, plan to reduce their debt load and refinance bank borrowings used in their latest acquisition through a rights issue totalling HK$7.9 billion. Net proceeds from the proposed fundraising are estimated to reach HK$7.78 billion as qualified investors of HKT Trust - the first business trust listed in Hong Kong, in 2011 - would be able to buy 18 share stapled units for every 100 they already own at HK$6.84 per unit, according to PCCW and HKT group filings yesterday with the Hong Kong stock exchange. The market, however, saw HKT Trust's shares fall 4.29 per cent to HK$8.25 on news of the equity financing initiative. PCCW's shares also declined to finish at HK$4.22, down 0.71 per cent. HKT Trust intends to issue 1.16 billion so-called rights share stapled units, priced at a 20.65 per cent discount from the closing price of HK$8.62 on Thursday. It currently has 6.417 billion share stapled units in issue, of which 63.07 per cent is owned by PCCW. The Communications Authority approved last month the HKT group's HK$18.8 billion takeover of rival CSL New World Mobility from Australian parent Telstra Corp and New World Development. That acquisition has made HKT, already the city's largest fixed-line network operator, its biggest wireless service provider. HKT, which runs the PCCW Mobile operation, will have about 37 per cent market share in terms of mobile subscribers after adding the three CSL-branded business units - 1010, one2free and New World Mobility. In a research note yesterday, Barclays said the merger would be "a material positive for the competitive dynamics in the Hong Kong wireless market" based on the prospects of higher margins and lower marketing costs for the remaining players. HKT said the rights issue would reduce the group's indebtedness and help "refinance the bank loans incurred" for its CSL acquisition. Barclays estimated the merged HKT and CSL operation's earnings before interest, taxes, depreciation and amortisation after the proposed rights issue could reach HK$10.47 billion. That would be higher than the HK$8.37 billion ebitda - a measure of a firm's operating profitability - calculated for HKT as a stand-alone operator in the same period. PCCW, Li's corporate flagship, will fully subscribe to its provisional allotment of 728.5 million rights share stapled units, allowing it to keep the same percentage stake in HKT Trust. The consideration, estimated at HK$4.98 billion, will be paid by PCCW in cash, using internal resources and from the drawdown of unused banking facilities available to the company. HKT will send the rights issue prospectus by the end of this month, and is likely to provide more financial detail. The expected period of dealing in rights share stapled units is from July 3 to 10. The joint underwriters for the issue include Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley and Standard Chartered Bank.