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Opinions differ on railway tie-up 2.
Landyork developers arrange $1b loan
1. Opinions differ on railway tie-up Talk
of a possible merger between MTR Corp (MTRC) and Kowloon-Canton Railway Corp (KCRC)
is understood to have exposed radical differences of opinion over the potential
success of such a move. Privatised MTRC and Government-owned KCRC are cautious
about commenting on the Government's study into the viability of the merger but
on some occasions their contrasting views have become apparent. While speaking
at a private seminar about Hong Kong's transport in February, MTRC project director
Russell Black reportedly supported uniting the two rail operators into one entity.
He reportedly said the merger move was logical and worth a try but financial and
accounting issues could pose a substantial problem. An MTRC spokeswoman did not
comment on Mr Black's remarks and only acknowledged the Government's feasibility
study on the merger. It is understood the Government revisited the merger idea
almost a year ago to facilitate an overhaul of the SAR's housing policy. Last
Tuesday, the Government said it would study the feasibility of merging MTRC and
KCRC in the wake of calls for such a move. On that day, KCRC chairman Michael
Tien Puk-sun said the corporation welcomed the merger study but pointed to a number
of hurdles a merger would face. The two corporations had stark differences in
terms of organisation culture, operation models and use of technology and rolling
stock, he said. Proponents of a merger said a merged entity would bring significant
cost savings, a unified fare system, a boost in efficiency and improved accountability
and transparency to the public. Cannibalisation between the MTRC and KCRC, particularly
in operating cross-harbour train services, would be avoided, they said. However,
opponents said a merger would create a rail monopoly, which effectively meant
a step backward in liberalising the SAR's utility sectors. Whatever the arguments
are, merging the two corporations will be a complicated task. A thorny issue is
how the interests of 460,000 MTRC minority shareholders would be protected should
the merger happen. The Government owns 76.55 per cent of the MTRC and all of the
KCRC. William Barron, a Hong Kong University associate professor and a researcher
at public policy think-tank Civic Exchange, supported the merger. ''It seems to
be a good idea on merging MTRC and KCRC to minimise chances of wasteful competition,''
he said, adding Hong Kong was the only city around the world with two railway
companies competing, but not co-operating with each other. [Source:
SCMP, 29 June 2002] 2.
Landyork developers arrange $1b loan
USI Holdings, Winsor Properties and Nan Fung Textiles have arranged a HK$1 billion
loan to finance their residential joint-venture development in Sha Tin. They estimated
investment for the project at HK$1.33 billion, including the HK$660 million paid
for the development site at a government auction in April. Landyork Investment,
a joint-venture company formed between USI, Winsor and Nan Fung, entered into
the loan agreement with banks on Tuesday. Bank of China (Hong Kong) is the lenders'
agent. The facility was for a four-year term and any draw-down will carry interest
at a commercial rate based on the Hong Kong interbank offered rate. The loan will
be used to refinance part of the site's acquisition and to finance development
of the project. Landyork Investment is owned 40 per cent by USI, 10 per cent by
Winsor and 50 per cent by Nan Fung. The Sha Tin site is the former Pak Tak Yuen
Government quarters and can be developed into 436,273 square feet of high-class
residential space. The HK$660 million Landyork paid represented an accommodation
value of HK$1,513 per square foot, which was at the high end of analysts' expectations.
The Government's opening auction price for the site was HK$460 million. USI, Winsor
and Nan Fung have each given an unconditional and irrevocable several repayment
guarantee in respect of the loan facility according to their shareholding in Landyork.
In the case of USI, the guarantee amounted to HK$400 million. They have also given
a completion guarantee procuring the completion of the project and the payment
of all construction costs, which were estimated to be less than HK$670 million. [Source:
SCMP, 29 June 2002] |  |
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