Chunghwa Telecom sold out 3% shares in after-hours auction

Taipei, Aug. 10, 2005 (CENS)--Under the shadow of a strike by its labor union, the state-run Chunghwa Telecom successfully sold out 3% of its shares in an after-hours auction on Aug. 9, marking an important step for its privatization.

A total of 289,000,000 shares of the company were put on the block, attracting an oversubscription almost double that amount. The floor price was set at NT$56.3 per share, representing a 12.73% discount over the average price for the past 10 trading sessions, a scale almost double that announced by the Ministry of Transportation and Communications previously. Chunghwa Telecom thus pocketed NT$16.294 billion from the sale. The auction was smoothly completed despite the strike staged by the labor union.

After several days of continuous slides, share price of the company shed another NT$0.5 on Aug. 9, closing at NT$61, as trading volume soared to 25,000,000 shares, the highest since March last year. At that price, discount for the floor price has been narrowed to 7.7%. However, since each share contains NT$4.7 of cash dividend, investors still stand to profit even if the share price dropped to its daily limit of 7% today.

Meanwhile, Chunghwa Telecom expects to win the approval of the U.S. Securities & Exchange Commission for the release of ADRs (American Depositary Receipts) soon. After the release, government's shareholding in the company will drop to 47.89%, thereby leading to the completion of its privatization program.

"Privatization is the ultimate goal of Chunghwa Telecom. Only via privatization can the company achieve the benefits of flexible procurement of resources, lowering costs, quick response to market demands," remarks Ho Chen-tan, chairman.

The auction was sponsored by Core Capital Securities. Total subscription topped 578,100,000 shares, double the amount on auction. Since individual investors enjoy the priority in the procurement, 77% of the shares were bought by individuals. As a result, the number of the company's shareholders can increase by 70,000 at the maximum.