CK Hutchison to use tower sale proceeds for share buyback

[HONG KONG] Hong Kong conglomerate CK Hutchison Holdings, which just agreed to sell its Europe tower assets to Spain's Cellnex Telecom for 10 billion euros (S$15.93 billion), said it plans to use part of the proceeds to buy back shares that have slumped 28 per cent this year.

The deal is estimated to generate about HK$60 billion (S$10.44 billion) in gains for CK Hutchison's shareholders, the company founded by billionaire Li Ka-shing said in a filing on Thursday. Cellnex will make an initial payment of 8.6 billion euros in cash and the rest in new shares that would give CK Hutchison a 5 per cent stake in the Spanish mast operator.

While Mr Li and his older son Victor Li - the chairman of the CK group - have been acquiring shares of their listed flagships in their personal capacity, the latest buyback plan by CK Hutchison is the first since September 2018.

The group, whose businesses span ports, telecommunications and retail, has been weathering multiple crises, including last year's political unrest in Hong Kong, the US-China trade spat and lately the coronavirus pandemic. After reporting a 29 per cent slump in first-half net income, CK Hutchison in August warned of further profit declines at its core operations in the second half.

The rest of the gains from the Cellnex transaction will be used for expansion and to reduce debt, CK Hutchison said in the filing. The cash raised will enable the company to cut net debt-to-net total capital ratio from 25.6 per cent to 15.2 per cent, it said.

Shares of CK Hutchison have rallied about 18 per cent since Bloomberg News reported the sale talks with Cellnex. The stock jumped as much as 3.6 per cent on Friday in Hong Kong, compared with a 1 per cent decline in the benchmark Hang Seng Index.

BLOOMBERG