Reed Smith Richards Butler, King & Wood and a host of other firms have advised on the Hong Kong listing of HKT Trust, the spin-off of Hong Kong’s largest mobile carrier PCCW, which raised HK$9.3 billion ($1.2 billion) when it floated on Nov. 29.
The offering was the first fixed single investment trust to list on the Hong Kong Stock Exchange and it braved a volatile market which has seen many HKEx IPOs withdrawn or halted in recent months.
Despite offering a relatively high yield of nine percent in 2012, the trust received a lukewarm response from investors. Its IPO was priced at the bottom end of the range and offered at HK$4.53 per share, while the retail portion of the offering was undersold and the international portion was “moderately oversubscribed,” according to the company’s securities filling.
Reed Smith advised the trustee-manager and the company as to Hong Kong law and U.S. Federal Securities and New York law; while King & Wood served as their PRC counsel and Conyers Dill & Pearman was retained as the Cayman and BVI advisor. Conyers’ team led by partners Christopher Bickley and Richard Hall.
HKT Trust, a spinoff of the Richard Li-controlled PCCW, is an integrated provider of fixed line, mobile and broadband, telecommunications services in Hong Kong.
A report issued by ratings agency Moody’s Investors Service on Nov. 29 confirmed HKT Ltd's ratings at Baa2 and left it with a stable outlook, since it plans to use $1 billion of the IPO proceeds to bring down debt. But it put the ratings on review for a possible downgrade in March.
"Downward pressure on the rating could materialise should HKT Group pursue a more aggressive distribution strategy such that debt levels rise to fund shareholder returns," Moody's said in a statement.
HKT Trust and HKT Ltd. jointly offered 2.05 billion share-stapled units, each comprising of a unit of HKT Trust, a preference share in HKT Ltd and an interest in ordinary shares of HKT Ltd held by the trustee manager.
Conyers’ Hong Kong partner Richard Hall said such a trust structure was designed to allow the HKT group to focus principally on distributions, as distinct from other listed issuers on the exchange.
“The trust structure and associated arrangements, including the role of the trustee manager in managing the trust and the issue of share stapled units, should provide investors with all the protections generally available to holders of shares under applicable laws, rules and codes in Hong Kong, whilst keeping the flexibility of the trust structure,” he explained.
China International Capital Corp, Deutsche Bank, Goldman Sachs and HSBC were the joint global coordinators for the offering, while JPMorgan, Standard Chartered and Singapore's DBS served as underwriters of the transaction.
The sponsors’ PRC counsel is Haiwen & Partners; while international law firm Freshfields Bruckhaus Deringer advised the joint sponsors and the underwriters as to Hong Kong law and U.S. Federal Securities and New York Law.
The Freshfields global capital markets team was led by Grace Huang and Ken Martin, head of the China corporate practice. ALB
Other related stories: