PCCW Limited

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PCCW Limited
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PCCW Limited

• A listed company in Hong Kong
• PCCW and its subsidiaries are the largest and
  most comprehensive communication services
  provider in Hong Kong
• Services include local telephony, international
  direct dial, mobile telecommunication, internet
  protocol-based business, broadband internet,
  pay-TV and information technology services
• Market capitalization HK37.5 billion (as at 7
  July 2006)
• Number of employees approximately 14,000

Source PCCW Annual Report 2005 and HKEx
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Pacific Century Regional Developments Limited
(PCRD)

• The owner of the Sale Shares
• A Singapore-based company listed on the Singapore
  Exchange Securities Trading Limited
• A member of the Pacific Century Group
• Main businesses Financial services,
  telecommunications and information technology,
  property and infrastructure investment and
  development
• Main subsidiary Pacific Century Insurance
  Holdings Limited (HKEx stock code 0065)
• 75.3 controlled by Mr. Li Tzar Kai, Richard

Source PCRD Annual Report 2005 and HKEx
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The Agreement

• Pacific Century Regional Development Limited
  (PCRD) has entered into a conditional sale and
  purchase agreement with Mr. Francis P.T. Leung
  and Fiorlatte Limited on 9 July 2006
• Announced was made on 10 July 2006
• Neither Mr. Francis P.T. Leung and Fiorlatte
  Limited is a connected person
• Mr. Leung is acting in his own capacity (through
  Fiorlatte Limited) and does not have any
  financial connection with China Netcom

Source HKEx
5
The Agreement

• PCRD has agreed to sell up to 1,526,773,301
  ordinary shares, representing approximately
  22.66 of the issued share capital of PCCW
• The consideration payable to PCRD for the Sales
  Shares is HK6.00 for each Sale Share
  (HK9,160,639,806 payable)
• Over the past three months prior to 10 July 2006,
  the volume weighted average of transacted price
  of PCCW shares is 5.2629
• Premium approximately 14.01

Source HKEx
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The Agreement

• The purchaser may elect to complete the Sale at
  any time on or after 20 December 2006 provided
  that
• A written notice is delivered
• The balance of the consideration payable, as well
  as the interest accrued and payable, is fully
  paid
• It is expected that Mr. Li Tzar Kai, Richard will
  resign from the Board following the First Payment
  having been made in full under the agreement

Source HKEx
7
Payment Schedule

• On the business day immediately following the
  date of the Agreement, the purchaser is required
  to pay the sum of HK500,000,000 to an escrow
  agent
• For the First Payment (prior to 14 December
  2006), the purchaser is required to
• Instruct escrow agent to pay all sums standing to
  the credit of the escrow account to PCRD
• Pay to PCRD an additional amount calculated as
  HK2,748,191,941.80 less the amount paid to PCRD
  under (i) above

Source HKEx
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Payment Schedule

• Second Payment
• An additional amount of HK780,000,000 and any
  interest accrued and payable
• On the date 12 months after the First Payment
  Date
• Final Payment
• The balance of the consideration payable and any
  interest accrued and payable
• On the date 18 months after the First Payment
  Date
• Interest shall be payable semi-annually after the
  first payment and the interest rate is 6.5 per
  annum.

Source HKEx
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Special Payment to PCCW Shareholders

• Pacific Century Diversified Limited (PCD) intends
  to make a special payment by way of voluntary
  conditional payment (HK0.33 to HK0.38 per
  public shares) to the holders of the public
  shares
• PCD
• A company wholly-owned by Mr. Li Tzar Kai,
  Richard
• A member of a group of private companies
  controlled the Pacific Century Group
• Conditions of this payment
• First payment being made on the first payment
  date in accordance with the terms of the
  Agreement
• China Netcom agreeing that PCCW Shares held by
  China Netcom do not qualify for the Special
  payment

Source HKEx
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Capital Structure of PCCW
Source HKEx
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Interest from other Companies

• Non-binding interest from Macquarie Bank Limited
  and TPG Newbridge
• Announced by PCCW on 19, 21 and 22 June 2006
• Provided non-binding expressions of interest on a
  confidential basis
• PCCW does not intend to disclose any of the terms
  of the expressions.

Source HKEx
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Interest from other Companies

• Macquarie Bank
• Australias largest investment bank
• TPG Newbridge
• A unit of Texas Pacific Group
• Had a pending offer to acquire an indirect 7
  stake in PCCW through the purchase of 25 of
  PCCWs Singapore-listed real estate subsidiary
  Pacific Century Regional Development
• Political implications?
• Strategic assets in overseas hand

Source HKEx
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Effect of the Sale on the Macquarie and TPG
Newbridge Expression of Interest

• The Board intends to continue to pursue the
  expressions of interest from Macquarie and TGP
  Newbridge
• Will discuss with Macquarie and TGP Newbridge
  their intentions with regard to their expression
  of interest

Source HKEx
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Stock Price of PCCW
Source DataStream
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Financial Information on PCCW
Source PCCW Annual Report 2005
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Financial Information on PCCW
Source PCCW Annual Report 2005
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Financial Information on PCCW

• As at 31 December 2005, net asset value of the
  Sales Shares was approximately S52.9 million
• Based on the volume weighted average price of the
  PCCW Shares on the HKSE on 7 July 2006 of
  HK5.5602, the market value of the Sale Shares is
  approximately HK8,489 million (approximately
  S1,825 million)
• For the financial year ended 31 December 2005,
  the net profit before tax, minority interest and
  exceptional items attributable to the Sale Shares
  is approximately S85.7 million

Source HKEx
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Financial Information on PCRD
Source PCRD Annual Report 2005 Exchange rate as
at 31 December 2005 1HKD0.2145SGD (from Reuters)
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Financial Information on PCRD
Source PCRD Annual Report 2005 Exchange rate as
at 31 December 2005 1HKD0.2145SGD (from Reuters)
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Financial Effects on PCRD
Source HKEx