Far East eyes profit of $500m from New York sale

PUBLISHED : Thursday, 14 July, 2005, 12:00am
UPDATED : Thursday, 14 July, 2005, 12:00am

Far East Consortium International expects to book a profit of up to $500 million from the controversial sale of a massive waterfront property in New York City which is the subject of a lawsuit filed by Donald Trump.

Deputy chairman David Chiu Tat-cheong revealed the figures yesterday as the company announced net profits had increased 169 per cent.

However, he declined to comment on the lawsuit taken out against him and fellow investors Henry Cheng Kar-shun and Vincent Lo Hong-sui.

They are being sued for US$500 million by Mr Trump, who alleges 'a staggering breach' of fiduciary duty in the US$1.76 billion sale of the 92-acre development site.

Mr Chiu said Far East Consortium would generate between $300 million to $500 million profit from the sale, which is due to be completed on August 17.

'The size of profit to be booked is largely subject to the tax system in the United States,' he added.

Meanwhile, a spokeswoman for Shiu On Holdings, whose chairman is Mr Lo, said: 'We cannot comment as the case is proceeding in court.'

The lawsuit, filed in a United States court on Monday, claims the Hong Kong investors declined to entertain several counter-offers as high as US$3 billion for the development, of which Mr Trump owns 30 per cent.

The suit alleged that the Hong Kong investors were either grossly negligent, self-dealing or had conflicts of interest in their refusal to accept a higher price.

Asked if the deal would be unfair to the shareholders of Far East, which has an effective 3.5 per cent stake in the property, Webb-site.com editor David Webb said it was impossible for anyone to take any sides at the moment.

'If Trump is continuing the legal action, we hopefully can find out the truth,' he added.

Yesterday, Far East announced net profit for the year to March had jumped 169 per cent from a year earlier to $400.47 million. A final dividend of five cents was given.

The hefty increase in profit was due mainly to the gain of more than $220 million from the sale of a commercial complex in Mongkok and the 100-room Dorsett Garden Hotel in Yau Ma Tei.

Meanwhile, Mr Chiu said a Taiwanese institutional fund had expressed interest in acquiring one of its four proposed hotels in Macau.

Far East plans to provide 3,190 rooms in the four hotels, along with a casino and a commercial and serviced apartment complex as part of the Cotai Strip development at a total investment of $2.8 billion.

The company would seek a bank loan of about $2 billion to finance the project while the $800 million balance would be met from internal resources.

Mr Chiu said he expected the company would generate a substantial increase in rental income once the complex was completed in about 2008.

Far East shares fell 3.05 per cent to close at $3.175 yesterday.