Hutch did it again
Issuer: Hutchison Whampoa Ltd Amount: $2.5 billion Type of issue: exchangeable bond Date of issue: January 8, 2000 Bookrunners: Goldman Sachs, Merrill Lynch
For those who took the assurance by Vodafone's chief executive Chris Gent, made last November, that Hutchison is a "happy shareholder" of Vodafone at face value, Hutchison's second convertible must have been a shock. On January 8 Hutchison Whampoa, the Hong Kong-based telecom, property and port company, issued a $2.5 billion three-year bond exchangeable into 536 million Vodafone shares - equivalent to 0.8% of all outstanding shares. The deal, managed by Merrill Lynch and Goldman Sachs, comes only three months after a similar $3 billion landmark issue in September, and one months after Gent met Hutchison chairman Li Ka-shing. This meeting resulted in Gent's statement that "Li is not a seller at anything like today's prices" - which were then well above the £2.20 at which the exchangeable was issued.
In Hong Kong, analysts don't recall Li Ka-shing saying that he would hold on to Vodafone indefinitely. Instead, they recall, he had said it was a good stake until something else came up, which is why the exchangeable left analysts there speculating about a secret investment alternative.