LABOR UNION FAILS TO STOP TAIWAN PRIVATIZATION

Global Finance, Oct 2005 by Platt, Gordon

DR NEWS

Three board members of Chunghwa Telecom alerted John Thain, CEO of the New York Stock Exchange, in August that a proposed secondary offering of the Taiwan-based company's stock and the prospective listing of American depositary receipts on the NYSE could be illegal. They urged Thain to postpone the listing of the ADRs until the legal issues could be resolved in Taiwan, where opposition lawmakers threatened to overrule the secondary offering.

The sale, which cut state ownership in Chunghwa to less than 50%, went ahead despite strikes and protests from Chunghwa's union, whose members fear job losses and lower pay as a result of the privatization. Some $2.56 billion in ADRs were offered in the US marketplace. Goldman Sachs, Morgan Stanley and DBS managed the secondary offering of shares by the Ministry of Transportation and Telecommunications. The Bank of New York was appointed as depositary bank.

The sale was one of Taiwan's largest-ever secondary offerings. Chunghwa first listed ADRs on the NYSE in July 2003, with its $1.6 billion initial public offering. The company is Taiwan's largest provider of fixed-line and mobile phone services, as well as its largest broadband Internet access provider. -GP