Richard Li Bid for PCCW Blocked by Appeals Court

A Hong Kong tycoon’s controversial $2 billion effort to take over telecom firm PCCW was blocked by a court Wednesday after securities regulators claimed the deal was marred by vote-rigging.

The ruling by a three-judge appeals panel overturned a lower court’s decision OK’ing the buyout led by company Chairman Richard Li.

It was the latest turn in a corporate saga that has dominated headlines in this Asian finance capital — and represented a blow to Li, the son of one of Asia’s richest men, billionaire tycoon Li Ka-shing.

Since its approval by shareholders in February, the deal has been dogged by criticism Li was dramatically undervaluing the territory’s major landline operator and claims the vote was rigged to inflate support.

Hong Kong’s securities watchdog, the Securities and Futures Commission, opened an investigation and sought to halt the deal in a high-profile case of court intervention by the territory’s regulators.

The commission lawyers maintained the vote was unfairly manipulated after about a half a million PCCW shares were doled out to employees of Fortis Insurance Company (Asia) Ltd. in an effort to sway votes. An executive who distributed the shares has ties to Li’s associates.

A court ruled in favor of Li and his buyout team earlier this month, saying there was lack of evidence to support the regulator’s case. But regulators quickly appealed, leading to Wednesday’s decision.

The deal, worth 15.9 billion Hong Kong dollars ($2.04 billion), would pay stockholders HK$4.50 for each share, giving Li and his buyout partners majority ownership.

4/22/2009 7:52 AM JEREMIAH MARQUEZ AP Business Writer HONG KONG