Hutchison Telecom sells HGC unit to Asia Cube for $1.9 billion in cash

HGC
Image credit: HGC

HONG KONG (Reuters) – Hutchison Telecommunications Hong Kong Holdings Ltd said on Sunday it agreed to sell its fixed-line telecoms business, Hutchison Global Communications (HGC), to Asia Cube Global Communications, a unit of I Squared Capital, raising funds to invest into mobile phone services and for working capital.

The company is selling HGC, which provides fixed-line phone services as well as Wi-Fi all around Hong Kong, for HK$14.5 billion ($1.86 billion) in cash to Asia Cube, according to a filing to the Hong Kong stock exchange. The value may be adjusted later based on debt, cash levels and other financial data of the business at the time of the closing.

Hutchison Telecom said it expected to make a profit of HK$5.8 billion on the sale of HGC.

Hutchison Telecom’s shares have risen nearly 23% since May 16, when the company acknowledged media reports about a potential sale of the fixed-line business.

Hutchison Telecom drew initial interest from a series of companies, including HKBN and SmarTone. The list of bidders narrowed down to two in the latter stages, a consortium of private equity firms TPG Capital Management LP and MBK Partners, and I Squared Capital, sources previously told Reuters.

The deal is subject to shareholders’ approval and is expected to close in October, Hutchison Telecom said in the filing.

CK Hutchison Holdings, which owns 66.1% of Hutchison Telecom, will vote all its shares in favor of the sale during an as-yet unscheduled extraordinary shareholders meeting to vote on the deal.

I Squared, which invests in global infrastructure in energy, utilities and transport, is among potential buyers for Equis Energy, Asia’s largest independent renewable energy producer, in a deal valued at up to $5 billion.

Hutchison Telecom said it appointed Deutsche Bank and Goldman Sachs as financial advisers on the transaction.

($1 = 7.8095 Hong Kong dollars)

(Reporting by Elzio Barreto; Editing by Jane Merriman)

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