Workers’ Union throws Chungwha buyback into doubt

24 Jun 2003

Plans by Taiwan’s biggest telco Chungwha Telecom [TW: 2412ta] for a share buyback next month have come under threat from the company’s Workers’ Union which is planning to block the deal. The company’s board are meeting today to discuss how many shares will be purchased as part of a strategy to make Chungwha’s stock more appealing to outside investors and boost demand for a proposed stake sale in the government-backed telco. The buyback has been prompted by five unsuccessful auctions to institutional investors and two further failed sales to individuals in the past three years. Chungwha executives hope that by buying around 1.33 billion shares, representing about 13.8% of the telco, the company’s improved earning per share figures will draw in new investors. But the Chungwha Telecom Workers’ Union are strongly opposed to the plan, claiming that it is politically motivated to fill the state coffers and, rather than benefit the company, would only add to its debt burden. The Union says that this year’s previously announced dividend yield of TWD5 per share is already enticement enough and has warned that it will do everything it can to block the buyback, including holding a press conference at the New York Stock Exchange to discourage potential investors.