CITIC, GE Capital may privatize AsiaSat
By Wang Yu (China Daily)Updated: 2007-02-15 11:04
State-owned conglomerate China International Trust & Investment Corp (CITIC) and GE Capital Equity Investments Ltd offered yesterday to take over Asia Satellite Telecommunications Holdings Ltd (AsiaSat) through a joint venture subsidiary.
The offer, aimed to privatize AsiaSat, involves a bid as high as HK$2.24 billion that will be financed by existing resources of CITIC Group and GE Equity. The offer was made through Modern Day Ltd, a venture jointly owned by CITIC Group and GE Equity, according to an AsiaSat statement yesterday.
"On completion of the acquisition and the privatization, AsiaSat will be jointly and indirectly owned by CITIC Group and General Electrical Capital Corporation," AsiaSat said in its statement.
Modern Day plans to delist AsiaSat once the purchase is completed, Bloomberg news service reported yesterday.
According to AsiaSat, the sale is the result of "persistent oversupply of transponder capacity and the slow introduction of new applications in the Asia-Pacific region".
"The satellite market in the region remains very competitive, and AsiaSat's share price has not performed satisfactorily," the telecom and satellite service provider said.
The price of AsiaSat's shares have plunged 11.9 percent over the past three years.
The proposed privatization would provide AsiaSat with greater flexibility to focus on its core business, the company said.
It would also relieve AsiaSat of the heavy financial and administrative burdens resulting from dual listings on both the Hong Kong and the New York stock exchanges, AsiaSat said.
Feng Dandan, a senior telecom analyst with Hong Kong-based Guotai Jun'an Securities Ltd, endorsed such a move from AsiaSat, contending that through privatization, AsiaSat does have a chance to perform better.
"Generally speaking, delisting and privatization will help a struggling
public company perform better," Feng said. "Poorly performing firms cannot raise
enough money from the stock market. Instead, they pay the lofty costs for
listing," Feng stressed.
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