HKT Trust and HKT Ltd., a unit of billionaire Richard Li’s PCCW Ltd., fell the most in nine months after announcing plans to raise $998 million through a rights issue to refinance borrowings.
Investors will be able to buy 18 stapled securities for every 100 they already own at subscription price of HK$6.84 a share, the company said in a filing. The issue price is 21 percent below yesterday’s closing price of HK$8.62. Shares fell the most since September.
HKT agreed in December to buy the CSL mobile-phone business in Hong Kong as Li seeks to boost scale in a market with about twice as many subscribers as people. The $2.43 billion deal, which was approved by Hong Kong regulators last month, was for Telstra Corp.’s 76 percent stake and the 24 percent held by New World Development Ltd.
“We are still in a low-interest rate environment and I think it’s obvious that they will finance partly using debt,” said Victor Yip, a Hong Kong-based analyst with UOB-Kay Hian Ltd. “It helps improve return on equity.”
HKT has about $3.9 billion in total debt, according to data compiled by Bloomberg.
HKT shares fell 4.3 percent, the most since Sept. 10, to close at HK$8.25 in Hong Kong. The benchmark Hang Seng Index gained 0.6 percent.
The rights issue is being underwritten by Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley and Standard Chartered Plc, HKT said.
PCCW, which currently owns 63 percent of HKT, said it will fully subscribe to the new shares.
The CSL acquisition returns ownership to Li of mobile-phone assets he sold more than a decade ago and gives his company two operators in a market where five carriers compete for customers among 7.2 million people.
HKT and CSL compete with Hutchison Telecommunications Hong Kong Holdings Ltd., SmarTone Telecommunications Holdings Ltd. and China Mobile Ltd.
Hong Kong had 16.7 million mobile-phone subscriptions as of June 2013, representing a penetration rate of 233 percent, according to government data.
Richard Li’s father, Li Ka-shing, is Asia’s richest man with a net worth of $32.5 billion, according to the Bloomberg Billionaires Index.
Telstra, Australia’s biggest phone company, is retreating from Hong Kong to focus on its domestic business. The Melbourne-based company lost more than A$2 billion ($1.9 billion) writing down assets after buying wireless and cable businesses in Asia.