CONFIDENTIAL
37
On 19 October 1987, a proposal was announced whereby the ownership of Cable and Wireless (Hong Kong) Limited ("CWHK"), in which the Fund has a 20% interest through the Financial Secretary Incorporated ("FSI"), and Hong Kong Telephone Company Limited ("HKT") would be combined under a new holding company, Hong Kong Telecommunications Limited ("HK Telecom"), with an authorized share capital of $5.25 billion and an issued share capital of about $4.75 billion. The latter would subsequently be listed on the Stock Exchange. Under the proposal, CWHK, HKT, and the subsidiaries of HKT, would become wholly-owned subsidiaries of HK Telecom and they would continue to operate as separate entities under their respective existing regulatory frameworks. In accordance with the proposal, the Fund, in substitution for its existing shareholding in CWHK, would receive new HK Telecom shares representing 11% of HK Telecom's issued share capital.
At the time the proposal was announced, the Cable and Wireless Group and FSI stated that in order to widen the shareholder base of, and to increase public participating in, HK Telecom by both local and overseas investors, they intended, subject to market conditions, to offer for sale to the public approximately 11% of the issued share capital of HK Telecom in January or February 1988, with both parties selling an equal number of shares. However, since that time, there had been a significant and adverse change in market conditions such that the originally intended offer for sale in January or February 1988 was not proceeded with. At the end of the year, the matter was being kept under close review.
CONFIDENTIAL