SYDNEY, Australia-Telstra Corporation Ltd. and Hong Kong Internet company Pacific Century CyberWorks Ltd. announced completion of revised terms of their alliance, first announced in April.
Telstra will grab control of PCCW’s recently acquired Hong Kong mobile company and reduce its cash commitment by $532 million under the new terms, prompted by PCCW’s plummeting share price since the first announcement.
Under the new terms of the strategic alliance, Telstra will acquire 60 percent of HKT Mobile for $1.68 billion with management and board control. PCCW acquired the stake in the Hong Kong wireless carrier from Cable & Wireless plc earlier this year.
The companies also said they plan to continue to work to create a regional wireless proposition and to bring in an appropriate strategic partner.
PCCW will issue to Telstra a convertible note for $750 million with a term of six years and an interest coupon of 5 percent for the first four years and 7 percent for the remaining two years. The conversion price of the convertible note will be a 15-percent premium to the value-weighted average price of PCCW shares during the 45-trading-day period following the execution of the agreements.
The companies’ Internet Protocol backbone company remains a 50-percent each joint venture.
