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Chunghwa ADR hangs fire on pricing

Participants in Chunghwa Telecom's on-off American depositary receipt (ADR) issue are playing a game of bluff and double bluff as they amass support for a dignified climbdown on the deal's pricing stalemate.

The Taiwanese company's international issue will happen, observers believe - the trick will be in bringing it at a price that will sell while enabling the Taiwan government to save face.

The ADRs, which are central to the government's privatization plans and Chunghwa's independence ambitions, were put on hold in January amid disagreements on pricing between the government and underwriters Goldman Sachs, Merrill Lynch and UBS Warburg.

Chunghwa and the government are still reeling from a disastrous IPO last year, blamed partly on over-optimistic pricing, after the government fixed a minimum issue price of NT$104. Less than 3% of the company was sold to the public, compared with a target of 16%.

With stock prices falling and several other telecom companies coming to market, the underwriters are fighting hard to convince the transport and communications ministry of the need for more realistic pricing this time round.

The government, though, is under pressure not to sell national assets to foreigners too cheaply, and the consensus-building requirement of Taiwanese politics is playing an important role in pricing.

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