CKI, Hopewell sell Guangzhou toll-road stakes for HK$2.97b
Cheung Kong Infrastructure Holdings (CKI) and Hopewell Highway Infrastructure (HHI) have agreed to sell their interests in a toll road in Guangzhou for a combined HK$2.97 billion.
CKI will sell its 44.4 per cent stake for HK$1.26 billion and expects to book a one-off gain of HK$810 million. HHI will book HK$803 million from the HK$1.71 billion sale of its 45 per cent stake, while its parent Hopewell Holdings is expected to book HK$621 million.
Their stakes in the 39km Guangzhou East-South-West ring road would be sold to their mainland partner, Guangzhou City Tongda Highway, as part of a municipal government revamp on the city's road network.
Proceeds of the divestment would boost the group's war chest in pursuing investment opportunities on the mainland, CKI said. HHI said it planned to use the money as general working capital and further investment.
'We believe that the company is now in a very strong financial position to consider and pursue other attractive infrastructure projects in the Pearl River Delta region,' HHI managing director Thomas Wu said.
CKI group managing director Kam Hing-lam said the deal was initiated by the partner as the municipal government was rationalising the entire road network in Guangzhou as part of its new strategy on traffic management.
Some analysts pointed out that the city was plagued by severe traffic jams especially on the ring road, a gateway to industrial cities in the thriving Pearl River Delta.
Mr Kam said completion of the sale was scheduled for the end of this month, implying that the HK$810 million gain could be booked this year. The group is due to deliver its interim results next Thursday.
Tongda Highway would assume all of CKI's liabilities in the ring road, he said.
Mr Kam said that CKI had invested about HK$1.5 billion in the ring road since the late 1990s and the sale would leave the group's portfolio in the mainland with about 400km of toll-road assets and a 3,000-megawatt power plant in Zhuhai.
'CKI is very bullish about the prospects of the Chinese infrastructure market. We have always considered this major market to be one of our core investment areas,' he said in a statement. 'The cash proceeds from this divestment will further enhance our capability to pursue new investment opportunities on the mainland.'
Shares in CKI fell 1.65 per cent, closing at HK$26.85 yesterday.