Telco Family Turns To Parent For Cash
The Age
Thursday April 10, 2003
The Roberts-Thomson family, founding shareholders in Hutchison Telecommunications Australia, has asked parent company Hutchison Whampoa of Hong Kong to take over a $33 million margin loan facility to avoid 85 million of the telco's stock being dumped on the market.
As Hutchison Australia shares crested $6 in early 2000, the family's private investment company Leanrose Pty Ltd, headed by deputy chairman and former managing director Barry Roberts-Thomson, would have been worth about $400 million or so on paper.
Now, with its stake worth just $25 million, it must urgently refinance the loan Leanrose used to buy 6.6 million shares in 2000.
Hutchison Whampoa has agreed to refinance the loan, but it wants security against all Leanrose's 85 million shares in the telco and it wants a personal guarantee from Mr Roberts-Thomson that the loan will be repaid.
The move would lift Hutchison Whampoa's deemed interest in Hutchison Australia from 57.8 per cent to 70.3 per cent.
In an independent report, Goldman Sachs warned that the original financier to Leanrose could forcibly liquidate the Roberts-Thomson family's investment, throwing 85 million shares onto the market when there is almost no demand for telecommunications stocks.
``This situation is a realistic possibility given the current loan provider's advice that it will not extend the margin loan beyond May 2003 and the very limited alternative refinancing possibilities available to Leanrose in the current circumstances," Goldman Sachs said in its report.
``Even if the sale process was not conducted with any degree of urgency, it is highly likely that an overhang of this magnitude would have a material depressing effect on the HTAL share price for a considerable period of time."
Shareholders will be asked to approve the deal at the annual meeting in Sydney on May 8.
© 2003 The Age