Product details

In January 2002, speculators in the finance community suspected that Ha Chung Fong, Chairman of Fountain Set (Holdings) Limited (Fountain Set), might be in the mood to reconsider a previous proposal to privatise the company. He was dissatisfied with the counter''s trading volume, and some managers of the firm also believed that the share price did not reflect its true value. In 1995, Fountain Set had attempted to privatise by way of a Scheme of Arrangement under Section 166 of the Companies Ordinance. The scheme was later abandoned due to difficulties in reaching an agreement between the company''s consortium shareholders and also problems in ascertaining the proportion of the holders of the company''s convertible notes. With the redemption of the convertible notes in 1999, financial analysts believed that privatising the company would not be as difficult as in 1995. This case would be an excellent vehicle for students to explore the motives behind the privatisation of a company and the implications of privatisation for management''s operating and financial strategies. Students could also evaluate the timing of the privatisation and the appropriateness of the offer price.