Hutchison share sale hubbub hits share price

Hutchison shares were beaten down 4.41 percent on Monday to HK$65

By Staff and wire reports

HONG KONG, China -- Hutchison Whampoa is refusing to say whether it was behind the sale of Deutsche Telekom shares last week, sending its stock price to 22-month lows on Monday.

Hutchison spokesperson Nora Yong declined to say whether the company had dumped 17.5 percent of the 206.6 million Telekom shares it received in the German group's takeover of U.S. mobile firm VoiceStream Wireless before the deal closed on June 1.

Rumors that Hutchison was behind the sale of 44 million Telekom shares sent Hong Kong stocks down to a 28-month low.

Hutchison shares were beaten down 4.41 percent on Monday to HK$65. They have lost 10 percent of their value since the Telekom share sale.

Market rumors

Sources have said that it looked like the bulk of the 33 million Telekom shares sold on August 7 by Deutsche Bank originated from Hutchison because it was able to execute the pre-closing transfer.

"I can understand the market interest in this, but the stance of our company has not changed," said Hutchison's Yong. "We have a lot of investments in many companies and we don't make it a practice to say everything. We don't want to make a precedent."

However, in selected cases, the company in the past has responded to market rumors with definitive answers about share sales.

Last week, a Hutchison spokeswoman denied market talk in London that it was placing Vodafone shares.

"If they sold (the 17.5 percent) before June 1, why was there no disclosure beforehand?" asked SG Securities analyst Robert Sassoon.

"And if they hadn't sold before then, wouldn't they be in breach of the lockup agreement?"

Since the VoiceStream deal closed on June 1, Hutchison has been restricted from selling any shares before September 1.

All the lockups on its Telekom shares are due to expire by December 1.

Whether the shares came from Hutchison or not, the Hong Kong ports, telecom, retail and property conglomerate will likely see its shares suffer from the overhang in Telekom shares, which were down by another one percent to 19.18 euros on Monday.

At one point last week they had lost more than a fifth of their value before recovering somewhat.

"It's a bit of a no-win situation," Sassoon said, adding that the decline in Telekom shares had reduced Hutchison's net asset value and increased the chance that the company would take a write-off on the value of its remaining stake in the company.

Finnish telecom company Sonera and other investors may also be waiting in the wings to offload Telekom shares they acquired in the VoiceStream deal.

Reuters contributed to this report.