5 May 2000
In response to media enquiries regarding S&P placing Hutchison Whampoa Limited ("HWL") on credit watch and Moody's changing HWL's credit outlook, HWL would like to make the following statement:
The ratings actions of both agencies do not represent a change in HWL's credit rating, but signal a concern that HWL's credit risk profile could change as a result of our 3rd Generation wireless initiatives in Europe. We have as yet not had a full opportunity to review the credit implications of those initiatives in detail with the agencies. Accordingly, we will be meeting with the agencies over the coming months to review our business models and plans, which have been conceived and will be implemented so as to ensure that HWL retains its current strong investment grade ratings.
Hutchison's financial position remains very strong with low gearing, good cash flow and strong recurring income.
The agency's concerns are similar in nature to those which were expressed in June 1999 when we announced our investments in VoiceStream in support of its then proposed merger with Omnipoint Communications. The investment has proved to be very successful, with the VoiceStream share price rising from our average cost of approximately US$22 at the time of the acquisition to the present price of approximately US$110, representing an aggregate increase in the market value of our investment of over US$4.8 Billion. Since that time, we have also realized gains in excess of US$20 Billion on the disposition of our interests in Orange Plc.
We are confident that our proposed 3rd Generation business plan in Europe will offer strong growth prospects for the Group while remaining consistent with the prudent and conservative credit profile management practices we have established for the Group.
For media enquiries, please contact:
Laura Cheung (852) 2128 1289
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