Social Capital at Work in PCCWs Acquisition of Cable & Wireless HKT Harvard Case Solution & Analysis

In March and April of 2000, a number of unusual decisions involving billions of dollars, were made by some of the biggest international companies and banks operating in Hong Kong. All of these solutions are focused on one 10-month, online business called Pacific Century CyberWorks Ltd (PCCW), who had long experience and a little bit of money. The most important asset of PCCW, it seemed, was a charismatic executive chairman, Richard Li Tzar-kai, son of the legendary tycoon Li Ka-Shing. However, London's cable and wireless controller. (C & W) has decided to sell the largest telecommunications provider in Hong Kong, Cable and Wireless HKT Ltd. (C & W HKT and HKT), to PCCW, a rival bidder Singapore Telecommunications Ltd. (SingTel). It was one of the largest corporate mergers in the history of Asia. Four leading international banks were prepared to guarantee U.S. $ 12 billion loan that PCCW, necessary for absorption, making it the largest syndicated loan ever in Asia. Four banks also rallied about 30 enthusiastic syndicate of banks on the loan. But high hopes for PCCW were destroyed in a few months. PCCW share price was almost destroyed during the 12 months after it peaked in early 2000. The company was heavily in debt and suffered heavy losses in 2000. In hindsight, PCCW, did not seem suited to run a huge telecommunications company. SingTel had a lot more experience and capital. So why is the board of C & W PCCW choose? And why the banks have decided to give her a U.S. $ 12 billion? "Hide
by Gilbert Wong, Heather McGregor, Vincent Mak, Pauline Ng Source: University of Hong Kong, 31 pages. Publication Date: July 16, 2002. Prod. #: HKU195-PDF-ENG

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