Pro-Beijing media ramp up attack on CK Hutchison ports deal

HONG KONG (Reuters) -A pro-Beijing Hong Kong newspaper stepped up criticism of CK Hutchison's ( CKHUF ) deal to sell its Panama ports to a BlackRock ( BLK )-led group, sending its shares lower on Monday, as sources said the transaction, due to be signed by April 2, would be delayed. The deal has become highly politicised as the Hong Kong conglomerate is thrust into the cross-hairs of an escalating China-U.S. trade war that has deepened concerns the financial hub's edge will erode further amid geopolitical tensions. CK Hutchison's ( CKHUF ) shares have dropped 12.9% since the close on March 13 - when it was first criticised by state media - to Monday's intraday low of HK$43.05, wiping off HK$24.3 billion in market value. It's currently valued at HK$167.6 billion ($21.6 billion).

The shares were down as much as 4.7% on Monday, but recovered some ground and were off 3.3% in early afternoon trade. Hong Kong's Hang Seng Index was 1.7% lower.

Reuters reported on Friday that CK Hutchison ( CKHUF ) had delayed part of the sale, although sources said the deal has not been called off.

CK Hutchison ( CKHUF ) has faced an increasing barrage of criticism from China on its decision to sell most of its $22.8 billion ports business to the U.S.-led group.

The sale is expected to garner the firm more than $19 billion in cash.

Pro-Beijing Ta Kung Pao published on Monday a full page of news articles that included comments from Hong Kong politicians and Chinese lawyers urging the Hong Kong conglomerate to rethink the transaction and supporting Chinese regulators' decision to review the deal.

It cited a senior partner of Kangda Law Firm as saying that other than reviewing the anti-trust law, China could also evaluate any security risks to its port system data using its national security law and data security law.

The newspaper has published a series of commentaries criticizing the deal, depicting it as a betrayal of China. One of its editorials has said the controversial port sale could potentially violate Hong Kong's national security laws, known as Article 23.

CK Hutchison ( CKHUF ) did not immediately respond a request for comment from Reuters.

Chinese authorities have reacted negatively to the sale plans, while the deal was hailed by U.S. President Donald Trump who said he wants to retake control of the strategic waterway.

China's market regulator said on Friday it would carry out an antitrust review on the Panama port deal in accordance with a law protecting fair competition to safeguard the public interest.

Definitive documentation for the two port operations near the Panama Canal was expected to be signed by April 2, according to the sale announcement on March 4.

Negotiation for the overall deal that covers a total of 43 ports in 23 countries is on an exclusive basis between CK Hutchison ( CKHUF ) and the consortium for 145 days until July 27.

"We are not surprised by the potential delay due to rising geopolitical implications, and in the meantime we believe CK Hutchison ( CKHUF ) will endeavor to resolve conflicts with various stakeholders before confirming the deal on 27 July," JPMorgan analysts wrote in a research note. "We won't be surprised if that date may be extended further, if necessary."

A CK Hutchison ( CKHUF ) unit operates two of the five ports adjacent to the Panama Canal, which manages about 3% of the global sea-borne trade. Panama first awarded the concession to the company in 1998 to run the ports and extended it for another 25 years in 2021.

A social media account linked to state broadcaster CCTV on Saturday said China had significant national interests in the transaction and the sale was "tantamount to handing a knife to an opponent". The post was deleted shortly after it was made public.

Separately, CK Hutchison ( CKHUF ) said on Monday it had not made any decision on its global telecommunications business, in response to media reports about a potential spin-off listing of the assets.

The company has started preparations to spin off its global telecommunication assets and list the business in London, Reuters reported on Friday, citing sources.

(Reporting by Clare Jim and Hong Kong newsroom; writing by Scott Murdoch. Editing by Anne Marie Roantree, Muralikumar Anantharaman and Gerry Doyle)