1 Disney plans $3.5b more thrills
Nickkita Lau, The Standard 23 December 2008
The government will not need to spend a cent in a Walt Disney Company proposal to inject more than HK$3.5 billion to expand Hong Kong Disneylands park area.
Disneylands managing director Andrew Kam Min-ho said the plan will not require the government, which holds 57 percent of the shares, to make an additional capital injection and will remain the major shareholder.
But the governments proportion of shares will be cut back a little bit.
Walt Disney Parks and Resorts Asia president and managing director Bill Ernest said the government and Walt Disney are negotiating on some complex issues, but he hopes a deal can be reached next year.
Disneys plan covers 48,562 square meters of the land unused in the first phrase of development. It includes three additional themed areas adjacent to Adventureland.
The current size of the park area is about 72,843 sq m, excluding two hotels, unused land and transportation facilities.
Kam said new rides, including thrilling ones geared toward young adults and some unique in Hong Kong will be included.
Kam said the cost of the expansion is about half that of the Kai Tak cruise terminal. It will create several thousand job vacancies.
The construction cost of the cruise terminal is about HK$7.2 billion, according to the government.
Kam added if the proposal is approved it will take two to three months for the project to begin and about two to three years to complete.
A Commerce and Economic Development Bureau spokesman said, as bureau chief Rita Lau Ng Wai-lan has said earlier, that since the expansion will involve capital restructure of the joint venture Hong Kong International Theme Parks Limited, the government will need to thoroughly consider the interest of Hong Kong and its return on investment. The negotiations are still ongoing and the government will not set a deadline.
An industry source believes this move is a sign of concession by Walt Disney and that the two shareholders have turned the table around. The source said the government is under pressure from the Legislative Council to stand firm and not sign another "unequal treaty" while Walt Disney is more eager to plug the deficit.
The government invested HK$23 billion in the park whereas Walt Disney put in HK$2.45 billion in building the theme park, with the ratio of shares at 57 percent and 43 percent.
The source said the government has adopted a negotiating strategy to show Walt Disney it is not desperate to expand because it has other options including buying back the theme park and running it as a franchise like the successful Tokyo Disneyland.
He believes the construction cost could be cut by 10 to 15 percent because the financial tsunami has brought down the price of raw materials.
2 Disneyland plans to grow by a third. Bill for theme park's 20-hectare expansion expected to be HK$3b-$4b
Dennis Eng, SCMP 23 December 2008
Hong Kong Disneyland's planned expansion would increase its size by more than one-third and cost about half the price of the cruise terminal to be built at Kai Tak, managing director Andrew Kam Min-ho said yesterday. The government estimates the terminal will cost HK$7.2 billion, meaning the park-expansion bill would be HK$3 billion to HK$4 billion.
Three new themed "lands" would occupy about 12 of the 20-plus hectares available for development at the theme-park site, Mr Kam said. Hong Kong Disneyland currently features Main Street USA, Fantasyland, Tomorrowland and the largest Adventureland in the world.
Disney, which has long expressed its willingness to finance the expansion, is still negotiating with the government, its joint-venture partner, on the way forward.
The government holds a 57 per cent stake in the theme park. Mr Kam said the administration would remain the majority shareholder and only suffer a slight decrease in its stake if no taxpayers' funds were used to help pay for the expansion.
It is understood that the lack of a proportionate injection of funds from the government would dilute its majority stake, and further progress would depend on whether it was willing to inject matching funds or accept a smaller stake.
Bill Ernest, Walt Disney Parks and Resorts president and managing director for Asia, said the talks were expected to continue for a while.
"I think the business is complex because any time we go in with our own level of capital, it puts it into the overall mix and then the government has to determine how it wants to handle it," he said.
"So it's not an easy negotiation, but it is ongoing and frankly it has been for a while."
A spokesman for the Commerce and Economic Development Bureau reiterated that different financing arrangements would change the capital structure of the theme-park joint venture.
The spokesman said the government needed to consider the public's interests and the return on its investment but declined to put a deadline on the talks.
Mr Kam said both sides understood the urgency of the negotiations given that the expansion plan would create thousands of much-needed jobs during the economic downturn and capitalise on falling commodity prices and labour costs. It was estimated that construction would take about two to three years, he said.
"We've always said that our expansion plan is like the 11th major infrastructure project," Mr Kam said, referring to Chief Executive Donald Tsang Yam-kuen's recent call to speed up 10 key projects to prop up the economy.
Hong Kong Disneyland is seeking to cater more to the young-adult market, as people in their 20s account for about 50 per cent of visitors to the theme park.
