Threat to downgrade PCCW debt rating over C&W approach

PCCW's plan to buy the troubled telecoms group Cable & Wireless met with a frosty reception yesterday, as leading ratings agency threatened to downgrade the Hong Kong-based company's telecoms unit.

Separately, the Hong Kong Stock Exchange sought reassurance from PCCW that it had handled the leak of the approach it made to the British group appropriately in the wake of two confusing statements.

Early on Thursday, PCCW denied it was in talks with C&W but, later in the day, went on to admit that it had made an approach about a possible takeover which had been rebuffed.

PCCW insisted yesterday, however, that it had complied with exchange rules. "We have complied with all the Hong Kong stock exchange procedures," said a spokeswoman, Joan Wagner.

Nevertheless, the prospect of PCCW launching a bid for C&W unnerved Moody's Investors Service, prompting it to place the ratings of PCCW-HKT Telephone, a unit of PCCW, on review for possible downgrade.

It is thought that PCCW had planned to make an offer of around 100p a share for C&W in conjunction with the venture capital house Texas Pacific, backed by a consortium of three banks.