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1. Stanley pier planned to ease traffic

2. Liao vows to consider all parties in rail plan

3. Cash, share rail buy proposed

4. Dragages' bid offers value for money: Tien Keith Wallis

1. Stanley pier planned to ease traffic
CHOW CHUNG-YAN, SCMP 31 October 2002

A pier will be built at Stanley to encourage more people to travel by boat and boost tourism.

Secretary for the Environment, Transport and Works Sarah Liao Sau-tung told legislators yesterday construction work on the pier, opposite Murray House, would start in 2004 if Legco approved the project, with completion due by 2006.

She said the pier would be part of a series of tourism developments at Stanley and would help ease traffic congestion.

"The pier will be designed specially for leisure and sightseeing boats," Dr Liao said. "It will also cater for other kinds of sea transport. We expect it will attract more companies to hold functions in Stanley and provide an alternative means of transport."

Tommy Cheung Yu-yan, representing the catering constituency, said restaurants and shops at Stanley would benefit.

He said many tourists shunned Stanley because of traffic congestion during holidays.

The Tourism Board chairwoman, legislator Selina Chow Liang Shuk-yee, urged the government to privatise the construction to improve efficiency. Secretary for Economic Development and Labour Stephen Ip Shu-kwan said he would consider the idea.

Southern District councillor Benny Chu Chu-yin said the council was briefed two months ago and had approved the plan.

2. Liao vows to consider all parties in rail plan
DENISE TSANG, SCMP 31 October 2002

The government will take into consideration the views of MTR Corp (MTRC), Kowloon-Canton Railway Corp (KCRC) and investment banks over a controversial rail merger proposal, a senior official has pledged.

Sarah Liao Sau-tung, Secretary for the Environment, Transport and Works, yesterday said the government was neutral about merging the SAR's rail operators into one entity.

Dr Liao's pledge follows the news on Tuesday of KCRC's contentious views on the possible merger, in stark contrast to MTRC's support.

KCRC chairman Michael Tien Puk-sun said the corporation was opposed to the merger because it would bring insignificant cost savings and leave competition with buses unresolved.

It is understood that the government-owned KCRC is pushing the government for a sole listing rather than a merger with semi-privatised MTRC.

Analysts and investment bankers broadly believe the government will give the go-ahead to a merger in an attempt to plug the HK$56 billion fiscal deficit.

ING Financial Markets analyst Peter Williamson said: "We believe a merger of MTRC with KCRC is likely.

"A merger would create shareholder value and be an attractive proposition for the government."

An investment bank director who handled MTRC's listing in 2000 said: "If KCRC goes public now or next year it will defeat the purpose of maximising proceeds from selling government assets to fill the deficit. But it's interesting that KCRC has chosen a high-profile way to [oppose]."

This means this year and next would not be an ideal time for KCRC's listing in the face of the poor stock market and an estimated HK$120 billion spending on new KCRC projects in the next 10 to 15 years.

Gary Chan, a Nomura International (Hong Kong) analyst, said: "While KCRC gave some reasons for its position, we believe unspoken reasons underpin the company's statement."

Mr Chan, who expected MTRC to buy KCRC by issuing new shares and cash, believed the government was keen to realise cash from the KCRC, even at a steep discount to boost the attractiveness of MTRC's shares.

Mr Williamson estimated MTRC might pay the government HK$24.45 billion for KCRC, half of which might come from borrowings and the remainder from new shares.

He said the deal might boost the government's shareholding in the enlarged entity to 82 per cent compared with an existing 76.6 per cent in MTRC.

He thought the government might be able to raise HK$33 billion by reducing its stake to 51 per cent at MTRC's present prices. The government had planned to raise HK$15 billion from selling the second tranche of MTRC shares this year, but this was put on hold until the merger study was completed.

Mr Williamson believed the merger would be positive for MTRC as its net debt to equity ratio would be reduced to 39.2 per cent from 57.6 per cent owing to KCRC's net cash position.

3. Cash, share rail buy proposed
Staff reporter, The Standard 31 October 2002

The Mass Transit Railway Corp could offer to take over Kowloon-Canton Railway Corporation in a cash and share buyout, sources said.

The government would reap a large lump sum of money under such an acquisition proposal, which could help reduce the government's ballooning deficit, the Hong Kong Economic Times reported.

An MTR Corp spokeswoman said a feasibility study on the merger was still continuing. ``It's still too early. We haven't gone into the details yet,'' she said.

The KCRC on Tuesday publicly opposed a merger of the two railway operators.

Other sources said the KCRC could seek a listing in the fourth quarter of 2003 to counter the MTR Corp proposal. The KCRC initially planned to go public by 2006.

On Tuesday, KCRC chairman Michael Tien said the board was opposed to the government's merger plans.

The MTR Corp supports a merger.

But should the government decide to go ahead with a merger, the KCRC would not be in any position to oppose it, government sources said, as it is a fully-owned by the government.

Secretary for the Environment, Transport and Works Sarah Liao said the government had yet to make a decision. ``We are open-minded,'' she said yesterday. The government was studying the details and waiting for a consultant's report.

4. Dragages' bid offers value for money: Tien Keith Wallis
The Standard 31 October 2002

The Kowloon-Canton Railway Corporation (KCRC) yesterday staunchly defended its decision to award a HK$2.8 billion tunnelling contract to the highest bidder, saying the deal represented the best value for money.

On Tuesday, The Standard revealed in an exclusive report that French contractor Dragages et Travaux Publics had won the contract even though its tender was significantly higher than the cheapest bid lodged by local firm Chun Wo Construction and Engineering in a joint venture with Italian contractor Impregilo.

Dragages offered the best technical solution for the price, KCRC chairman Michael Tien said yesterday, while refusing to give details of the bid by Chun Wo/Impregilo.

He said there was a comprehensive marking system that allocated 50 per cent of the bid assessment for the technical and design submission and 50 per cent on price.

``Dragages scored higher technically, but lower financially. According to a pre-determined formula, Dragages came out on top,'' Tien said.

Democratic Party infrastructure spokesman Albert Chan told The Standard it was difficult to criticise procedures and methods used by the KCRC because they had been scrutinised by the Independent Commission Against Corruption.

But he said the history of the project, with KCRC initially planning to negotiate a contract with Dragages, meant there was public disquiet about the result of the open tender.

In a meeting with Tien yesterday, Chan proposed the KCRC appoint an independent committee ``to look at the tender documents to see if it would agree with KCRC's decision.

``But Tien turned down the suggestion'', Chan said.

KCRC chief executive Yeung Kai-yin confirmed that the corporation initially planned to negotiate a contract with Dragages when plans for a tunnel under the Long Valley between Sheung Shui and Chau Tau were proposed last year. This followed the rejection of a planned viaduct by the Environmental Protection Department.

``In the event, the managing board decided upon an open tender,'' Yeung said.

He confirmed that Dragages produced designs and specifications that were later used as part of the open tender.

Asked if Dragages was given an understanding that it would win the bid in the open tender, Yeung said: ``Definitely not. We did not enter into an agreement. Dragages had to compete using the same specifications.''

Tien denied he had executed a U-turn on a possible merger between the KCRC and the MTR Corp, after saying on Tuesday the board had told the government it was against such a move.

His previous comments, which suggested he was in favour of the two rail corporations merging, represented a personal view, Tien said.