An injection of more than $11.8 billion in fresh cash from the sale of CK Hutchison's UK-based wireless network towers will mostly be spent buying back its shares, the company said Friday.
Since the start of the year, CK Hutchison's share price has fallen more than 28%. The stock rebounded last month - returning to levels not seen since April. CK Hutchison's share price was HK$53.90 ($6.95) a share at noon Friday.
The company said the sale of its Europe tower assets to Spain's Cellnex Telecom should generate gains of about $7.7 billion, according to a filing.
Cellnex has agreed to make an initial payment of $10 billion in cash, while the remainder will be in new shares. The deal would give CK Hutchison a 5% stake in the Spanish wireless network operator.
While most of the funds will go to the buyback, CK Hutchison said some will be spent on reducing debt and expanding some of its more profitable businesses. In its filing, the company said the cash will help it cut its net debt-to-net-capital ratio to 15.2% from 25.6%.
CK Hutchison's founder, billionaire Li Ka-shing, has been acquiring shares of his company along with the rest of his family. The last time the company initiated a major buyback program was in September 2018.
The conglomerate's businesses, which include retail, infrastructure, real estate and telecommunications, have all been hit hard by several crises - including civil unrest in Hong Kong, political tensions between the U.S. and China and the coronavirus pandemic.
The struggles were evident in the company's first-half earnings when it logged a 29% decrease in net income. In August, CK Hutchison warned investors that further profit declines might happen as its core operations are struggling to recover from the world crisis.
