Hong Kong tycoon appeals over PCCW buyout

Hong Kong tycoon Richard Li Tuesday lodged an appeal against a court decision that blocked his controversial 2.1 billion US dollar buyout bid for telecoms giant PCCW, a spokesman said.

The PCCW chairman, through his investment vehicle Pacific Century Regional Developments (PCRD), gave notice that it will challenge the Court of Appeal's decision to halt the privatisation, a PCRD spokeswoman told AFP.

Li's move came a day after a written judgement concluded that a February shareholder vote to take the city's largest fixed-line operator private had been unfairly manipulated.

The judgement, which fleshed out an earlier decision, had been keenly awaited by market-watchers to assess what effect it may have on future privatisation bids.

Li dropped the buyout plan after last month's decision, but has not ruled out a future move.

The long-running saga has gripped the financial hub, as it pitted one of the city's richest families -- Li's father is Hong Kong's richest man Li Ka-shing -- against minority shareholders and the Securities and Futures Commission (SFC), a regulator.

The central question for the three-judge Court of Appeal panel was whether a February shareholder vote to approve the privatisation scheme had been unfairly rigged by some of Li's associates.

The judges ruled that Lam Hau-wah, a senior manager at Fortis Insurance Company (Asia), dished out shares to insurance agents and others in return for them approving the controversial vote.

The ruling said this was unfair to minority shareholders and therefore a decision by a lower court clearing the privatisation should be overturned.

"Vote manipulation is nothing less than a form of dishonesty. The court cannot sanction dishonesty," Justice Anthony Rogers wrote in the decision.

The SFC said in court the manipulation plot was hatched by Lam and Francis Yuen, a close Li associate and deputy chairman of PCRD, through which Li is making the privatisation move.

Following phone conversations between the two, Lam bought 500,000 shares in PCCW and handed them out to his agents, under the guise of a bonus, and on the condition they support the vote, the SFC said.

At the time, the buyout bid was struggling to meet the so-called "head-count" requirement that more than 50 percent of individual shareholders vote in favour of any privatisation.

Rogers said there was not enough evidence to implicate Yuen, but he said that because Lam had given the shares away and paid for some associated costs, "he was in effect buying the votes."

A group of minority shareholders, many of them elderly, fiercely opposed the buyout bid after seeing the value of their shares plummet from more than 100 Hong Kong dollars.

Li and his partner China Unicom were offering 4.50 dollars per share.

PCCW, PCRD and Fortis have denied any knowledge of the manipulation.

Although vote-rigging is not illegal in Hong Kong, if it is found that some voters had a relationship with the major shareholders, they are not counted as independent and can be ineligible to vote in such shareholder meetings.