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Richard Lee Quotes HK$1.5b for PCCW Headquarters Building
With long-term renting right in hand, Pacific Century CyberWorks Ltd. (PCCW) currently offers its Hong Kong Telecom Center for sale.
However, the price offered by Tai Koo Real Estate, the company which has the priority in subscribing, is far from enough to PCCW's quote. The purchasing plan therefore has been terminated. AIG, the Inc. that has the intention to purchase the Center and PCCW, also rewrote its plan to an independent purchase of PCCW insurance.
Gross area of PCCW Building reaches 550,000 square metersAccording to the annual report of PCCW, the company possesses the spaces from floor 7 to 13, 16 to 18, 22 to 28, 33 to 28 and a half area of floor 29. The gross area hits 550,000 square meters. The renting term exceeds 50 years.
For a long time, PCCW cannot sell the Telecom Center because the Center was completed after PCCW and Tai Koo signed the agreement. As sources say, the Center was completed in 1995. However, Hong Kong Telecom and Tai Koo Real Estate signed an agreement in 1992 that the transfer contract cannot be signed until the Center is completed. Since Tai Koo and Hong Kong Telecom (renamed as Cable & Wireless HKT now) wished to establish a cooperative relationship as quickly as possible, the two sides signed a long-term renting agreement. Hong Kong Telecom paid HK$670 million in a lump sum to Tai Koo Real Estate and add paid token HK$1 to it every year. By this means, Tai Koo sold its estate to Hong Kong Telecom in a disguise form. It merely reserved the management rights and priority of purchase.
Presently, the PCCW, deeply in debt, has to reorganize its renting estate so as to cut down the cost. It is said that PCCW originally planed to sell the whole building at HK$1.5 billion by a package sale.
AIG shows great interests in PCCW InsurancePersons concerned pointed out that PCCW has been considering selling its insurance business. In early this year, American International Group, Inc. (AIG) offered the purchase program of PCCW Insurance and Hong Kong Telecom Center. The buyer hoped that PCCW may quote a reasonable price. However, PCCW just waited for a better price. Related sources say that the sharp fall of Hong Kong real estate market also impelled PCCW to sit on the sales of its Telecom Center for the moment.
In addition, it is said that although AIG gave up purchasing the Telecom Center, it is greatly interested in PCCW insurance. However, persons of the circle thought since AIA, subsidiary of the AIG, has occupied a leading status in Hong Kong insurance market with the market proportion hitting 20 percent, it is absolutely unnecessary for AIG to purchase other insurance companies unless the price is extremely attractive.
By PD Online Staff Member Du Minghua
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