Since PCRD is listed on the Singapore Exchange and HKT Trust is listed on the Hong Kong Exchange, PCRD says shareholders can elect to receive cash. This option provides flexibility for shareholders who do not wish to hold the stapled units listed on the HKEx or whose entitlement to HKT Trust units may be uneconomic to trade. The cash option will be equivalent to the value of shareholders’ entitlement in the proposed distribution. The proposal is for shareholders of PCRD to receive 0.05 HKT stapled units for each ordinary PCRD.
Sometimes distributions in specie are viewed in a less favourable light. Why would a company divest its assets to its shareholders? Whatever the reason, the company announcing the divestment usually experiences a short-term bounce. Will this last?
On Aug 12, Pacific Century Regional Developments (PCRD) announced that its board is proposing to jointly distribute a specie of 132.4 million stapled units by HKT Trust and its management company HKT Management. The HKT Trust units owned by PCRD represent around 1.75% of HKT Trust’s stapled units (HKT stands for Hong Kong Telecom). The Hong Kong Exchange’s (HKEx) trust structure differs from Singapore’s in that HKT Trust — and its management company HKT Management — were established as a single investment trust, hence the stapled units. The share stapled units jointly issued by the HKT Trust and HKT are listed on the HKEx.
