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Project Diamond
What’s the transaction about?
1.
Cheung Kong and Hutchison Whampoa
have been around for so many years.
Why change? Why now?
• You have all been a part of our growth
story for the past two to three decades.
Cheung Kong and HWL both have now
reached a size where it makes strategic
and economic sense to carry out this
reorganisation.
• We, and many in the analyst community,
have recognised the holding company
discount for a number of years. However,
it wasn’t until last summer that a suitable
proposal was put together to unlock this
value for shareholders by eliminating
the layered holding structure of Cheung
Kong and HWL.
• The reorganisation will also better
position the companies for further
expansion in the future.
• This arrangement will enhance
investment and financing flexibility for
business units.
• Investors of the company will also have
greater flexibility and choice to adjust
their shareholdings in CK Hutchison or CK
Property according to their own individual
investment objectives and preferences.
2.
Will Hutchison Whampoa Ltd (HWL)
cease to exist?
• Of course not. HWL will no longer
be a listed company but the name,
logo, assets and obligations will all be
maintained.
• HWL’s contracts, subsidiaries and
corporate functions will remain as they
were, as will all the staff’s contracts and
benefits.
• All business contracts and dealings
made under HWL will continue to
be made under HWL and will all be
honoured. In short, it’s business as usual.
3.
Will this make the property
business smaller?
• On the contrary, by combining the
two property portfolios together, CK
Property will become an even more
powerful player in the property sector.
• The combined property business,
CK Property, will be the number one
listed hotel owner-operator in Hong
Kong, with 12,150 rooms in Hong Kong
and a total of 14,680 rooms worldwide.
It will have the second largest Hong
Kong rental property portfolio and 17
million square feet gross floor area
of rental properties worldwide.
• In addition, it will be the top property
developer in Hong Kong and the
Mainland with a 170 million square
feet landbank.
4.
Does this mean Chairman Li Ka-shing
is retiring?
• Mr Li has no plans to retire yet. Mr Li will
remain Chairman and the Li family will
remain the largest shareholder of both
companies. Following the reorganisation,
shareholders can invest directly into the
two separate listed vehicles alongside
the Li family and can be assured their
interests align. As a responsible leader,
he has in place a succession plan that
will ensure the continuing success of the
companies going forward.
What does it mean for me?
5.
Will this impact my job?
• No. It will be business as usual for
everyone in the Group.
• We will continue to grow our respective
businesses and most of your reporting
lines will not change.
• It may, in fact, provide a clearer picture
for your business when it comes to
investing in future developments without
having to worry about competing forces
with sister companies.
6.
Will this impact my benefits?
Will my current employment
terms be changed?
• No. There will not be any changes to
your benefits nor any change to your
retirement schemes.
• As mentioned, it’s business as usual.
7.
What should we tell our business
partners about this transaction?
• Simple. There will be no impact.
• Our financial strength will not change.
Our operations will not change. Our
contracts are valid and continue to be so.
• CK Hutchison will still be in over 50
countries with enhanced scale. The
reorganisation will see a consolidation
of our infrastructure assets that were
previously co-owned. As well, CK
Hutchison will increase its ownership
in Husky Energy to become its largest
shareholder. CK Hutchison will benefit
from enhanced liquidity and CK Property
will have a clean capital structure and a
separate fundraising platform as a pure
property play.
• Rating agencies have affirmed
Hutchison Whampoa’s rating following
the announcement of the proposed
reorganisation. Management has
announced there will be no adverse
effect to Cheung Kong or Hutchison
Whampoa creditors.
Sphere
answers some of the most common questions that
have been asked by the HWL family in the past two months.
Chairman Li Ka-shing
“The reorganisation will place
the companies in an even
stronger position for future
growth and development.”
Sphere
#37
2015
06
