PCCW has taken the unusual step of issuing a statement denying it lacks the funds to pay dividends.
statement
The carrier announced an interim profit fall of 17% on Thursday, and said it would not pay a dividend.
It said its net debt in the first half rose to HK$30.59 billion ($3.93 billion), compared with HK$22.81 billion six months earlier, “mainly due to the payment of the special dividend during the period.” Net finance costs increased 25% to HK$736 million, the company revealed.
Following the collapse of chairman Richard Li’s attempted privatization, the company announced a special dividend of HK$1.30 a share on April 22. It paid an interim dividend of HK7 cents a share last year.
PCCW’s statement said it noted “certain press reports in today’s newspapers… that the company is not able to pay dividends to shareholders in the future because of its negative equity position on the group consolidated level,” the statement said.
“The company wishes to clarify that these press reports are inaccurate as a dividend is declared and paid out of a company’s distributable reserves, not group consolidated reserves. The company has positive distributable reserves as at 30 June, 2009.”
Moody’s has a BBB credit rating on PCCW.
PCCW’s share price opened last Monday at HK$2.15, and fell from HK$2.12 to HK$2.05 on Friday.