Aug. 24 (Bloomberg) -- PCCW Ltd., Hong Kong’s biggest phone carrier, fell the most in more than 15 months on the city’s stock exchange after saying it will sell HK$1.3 billion ($167 million) of new stock at a discount to cut debt.
The phone carrier dropped 9.8 percent, the biggest decline since May 7, 2009, to close at HK$2.59. The company will sell 500 million shares in a placement to outside investors at HK$2.60 apiece, a 9.4 percent discount to yesterday’s closing price, it said in a regulatory filing today.
PCCW is selling shares to raise capital for the first time since 2005 as the stock surged 39 percent this year, the second-biggest gain in the MSCI Asia Pacific Telecommunications Services Index. The company’s debt increased after it spent HK$8.8 billion to pay a special dividend last year, when billionaire Chairman Richard Li abandoned a HK$15.9 billion buyout bid for the carrier.
“Current market conditions are favorable for equity fund raising,” PCCW said in its filing. The company will use net proceeds from the sale to repay debts and for “general corporate purposes,” it said.
Net debt increased to HK$28.7 billion at the end of June from HK$27.2 billion six months earlier, PCCW said this month. Finance costs surged to HK$806 million in the first half from HK$748 million a year earlier, the company said.
PCCW sold about $1 billion in new stock to China Network Communications Group in 2005, according to data compiled by Bloomberg.
Morgan Stanley and HSBC Holdings Plc are managing PCCW’s stock placement.
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