In relation to the waivers to the Listing Rules granted to Pacific Century Cyberworks (PCCW), Hong Kong Exchanges and Clearing Limited (HKEx) hopes the following information will clarify the basis of the HK$2 billion threshold granted to PCCW.

After PCCW's acquisition of Cable & Wireless HKT Limited in August 2000, PCCW requested a waiver from the strict compliance to Rule 14.09 of the Listing Rules, which concerns the calculation of various size tests for the classification of notifiable transactions.

HKEx, after working closely with the Securities and Futures Commission, established a threshold of HK$2 billion for the assets test and consideration test for notifiable transactions under the rule. All other tests remain the same and the alternative set of tests does not apply to connected transactions.

In establishing the threshold, HKEx considered the Rules of the London Stock Exchange (LSE) which permit the use of gross assets rather than net assets when classifying transactions. The equivalent LSE threshold for Hong Kong's discloseable transactions is 5% of gross assets. Consequently the terms of PCCW's waiver were determined based on 5% of the unaudited gross assets less current liabilities of the PCCW Group as at 31 August 2000 less certain cash balances which were to be used for debt repayments in the short term, rounded down to the nearest billion. This resulted in the figure of HK$2 billion.

The overall principle of HKEx when considering an issuer!&s request for a waiver from strict compliance of the Listing Rules is to balance regulatory requirements and investor protection without restricting the issuer!&s business activities. In the case of PCCW, HKEx believes this has been achieved.