PCCW is now launching IPO of the HKT Trust (Stock Code 6823). While the media coverage is mainly on the prospective yield of the new stock, I find, however, that not many people realize that the stock is offered as Shared Stapled Units (股份合訂單位). In other words, each unit comprises three components:
(a) A unit in the HKT Trust
(b) A beneficial interest of the specially indentified Ordinary Share in the HKT Limited
(c) A specifically identified Preferential Share in the HKT Limited which is "Stapled" to the Unit.
In fact, this complicated arrangement makes me feel dizzy.
In the prospectus, there is a dedicated section to stipulate why this complicated arrangement is adopted.
(a) The Trust structure can ensure an explicit profit distribution policy
(b) The Ordinary share can confer proper rights from the actual company (HKT Limited)
(c) The Preference share can confer proper rights in case of the winding up of HKT Limited or HKT Trust.
On the other hand, the following are the disadvantages:
(a) It is a novel and unprecedented structure in the HKT market
(b) There are administrative costs associated with the HKT Trust
(c) As the duration of the HKT Trust is a fixed period (80 years less one day), the procedures related to the terminating of HKT Trust is necessary.
Frankly speaking, after reading, I still have no clues why this complicated arrangement is necessary. (My slogan is 'Simple is Beautiful.) I understand that so far, the IPO has not aroused great interest from general investors. I am not sure whether or not they stay alert on the previous great financial skills (tricks) encountered.
