C&W bond issue shows lack of confidence in PCCW: analyst

HONG KONG (AFX-ASIA) - Cable & Wireless PLC's proposal to issue zero coupon bonds convertible into Pacific Century CyberWorks Ltd shares relects a lack of confidence in PCCW, an analyst with a local brokerage said.	    "C&W has been on the board of PCCW and for them to value PCCW shares at 3.60 hkd per share shows what they think of the company," she said.	    She said it is difficult to comment on the bond issue as details have yet to be released but it is likely to be offered at attractive terms to ensure it is taken up.	    "I suppose at this time it is pretty hard to place out the shares so convertible bonds are less risky," she said.	    She said news of the convertible bond issue will remove the overhang that has been plaguing PCCW's share price for the past few months.	    "The conversion price of 3.60 hkd (for PCCW shares) indicates the value put on the company by C&W," she said.	    "I would say it is negative for the company.	    "I would think PCCW wants to get rid of the shares and since they can't place them out, they are issuing the bonds.	    "C&W is not optimistic about the company, and they do know the company well," she said.	    She values PCCW at less than 2.00 hkd per share.	    "We took a look at PCCW's cash flow and in 2006, when one of its long-term loans expires, they may have difficulty repaying its capital."	    PCCW took out a 4.7 bln usd term loan facility earlier this year. The facility was issued in three tranches, the largest of which expires in five years.	    She said the cash cow for PCCW is its IDD and fixed line services while its new economy operations are not doing very well.    

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