THURSDAY, JUNE 25, 1981
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NEW ARRANGEMENTS FOR CABLE AND WIRELESS IN HONG KONG
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THE HONG KONG GOVERNMENT AND CABLE AND WIRELESS ANNOUNCE THAT AGREEMENT HAS BEEN REACHED UPON THE TERMS ON WHICH THE CABLE AND WIRELESS GROUP WILL CONTINUE TO PROVIDE EXTERNAL TELECOMMUNICATIONS SERVICES IN HONG KONG. THESE NEW ARRANGEMENTS ARE EXPECTED TO TAKE EFFECT FROM OCTOBER 1, 1981.
UNDER THE NEW ARRANGEMENTS, CABLE AND WIRELESS HAS AGREED TO TRANSFER ITS TELECOMMUNICATIONS BUSINESS, CARRIED OUT AT PRESENT BY A BRANCH OF THE PARENT COMPANY, TO A NEW SUBSIDIARY, CABLE AND WIRELESS (HONG KONG) LIMITED TO BE INCORPORATED IN HONG KONG, THE HONG KONG GOVERNMENT HAS AGREED TO GRANT TO CABLE AND WIRELESS (HONG KONG) LIMITED A NEW 25-YEAR LICENCE COVERING HONG KONG'S EXTERNAL TELECOMMUNICATIONS SERVICES INCLUDING TELEX, TELEPHONE AND TELEGRAPH. THE ROYALTY PAYABLE UNDER THIS NEW LICENCE IS TO REMAIN AT THE SAME LEVEL AS UNDER THE EXISTING LICENCE AND IS SUBJECT TO AN INITIAL REVIEW IN 1988.
AS PART OF THE AGREEMENT CABLE AND WIRELESS HAS AGREED TO SELL 20 PER CENT OF THE ORDINARY SHARE CAPITAL OF CABLE AND WIRELESS (HONG KONG) LIMITED TO THE HONG KONG GOVERNMENT. IN CONSIDERATION OF THIS, A CASH INVESTMENT OF $763.75 MILLION WILL BE MADE AND AS AN ADDITIONAL CONSIDERATION. THE HONG KONG GOVERNMENT WILL PROVIDE UP TO $100 MILLION TO COVER TAXES AND DUTIES ARISING
IN HONG KONG AS A RESULT OF THE FORMATION OF THE HONG KONG SUBSIDIARY.
CABLE AND WIRELESS WILL RETAIN THE REMAINING 80 PER CENT OF THE SHARE CAPITAL OF CABLE AND WIRELESS (HONG KONG) LIMITED. THE TWO PARTIES WERE ADVISED ON THE TRANSACTION BY MERCHANT BANKERS: CABLE AND WIRELESS BY KLEINWORT BENSON AND THE HONG KONG GOVERNMENT BY SCHRODERS AND CHARTERED LTD.
IT HAS BEEN AGREED THAT THE HONG KONG GOVERNMENT WILL APPOINT TWO DIRECTORS TO THE BOARD OF CABLE AND WIRELESS (HONG KONG) LIMITED.
THE CABLE AND WIRELESS GROUP AND ITS PREDECESSORS HAVE PROVIDED A RANGE OF EXTERNAL TELECOMMUNICATIONS SERVICES IN HONG KONG SINCE 1871.
MR ERIC SHARP, CHAIRMAN OF CABLE AND WIRELESS SAID: +WE BELIEVE THAT THESE NEW ARRANGEMENTS ARE VERY SATISFACTORY FOR ALL PARTIES INVOLVED. SO FAR AS CABLE AND WIRELESS IS CONCERNED, IT PROVIDES A FIRM BASE FROM WHICH AS A GROUP WE CAN CONTINUE TO PROVIDE HONG KONG WITH THE FIRST CLASS TELECOMMUNICATIONS SERVICE
IT HAS ENJOYED IN THE PAST. OUR RELATIONSHIP WITH THE HONG KONG GOVERNMENT IS EXTREMELY GOOD, AND WE ARE DELIGHTED TO WELCOME THEM AS A SHAREHOLDER IN THE HONG KONG COMPANY.+
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