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Carrie Lee

FIVE major Hongkong investors have agreed to buy a Canadian oil and gas company, apparently undeterred by the poor performance of fellow tycoon Li Ka-shing's Husky Oil.

   The investors, led by Mr Cheng Yu-tung, Mr Stanley Ho and Mr Lee Shau-kee, will buy Westcoast Petroleum from parent Westcoast Energy for C$247.5 million (about HK$1.52 billion).

  Mr Cheng is chairman of New World Development, Mr Ho is chairman of Shun Tak Holdings and Mr Lee is chairman of Henderson Land Development.

  The sale price is below the carrying value of the investment on Westcoast Energy's accounts and will result in a loss from discontinued operations of about $160 million, according to the vendor. The sale is scheduled to close on May 5.

   The buyers could not be reached yesterday for details.

   The two other Hongkong partners and the stakes of each participant are unknown.

  Mr Cheng took an active role in organising the deal, while Mr Lee was a passive participant, said a source, who made no comment on Mr Ho's involvement.

  Mr Cheng already has a major stake in the Canadian oil business.

   He led another group in the $70 million purchase of 41 per cent of Numac Oil and Gas of Edmonton last April.

  Analysts questioned why the Hongkong property executives were interested in Alberta-based Westcoast Petroleum, given the troubles at Husky Oil, which is 95 per cent owned by Mr Li.

  Last March, Husky Oil hit the headlines when its 1991 losses dragged down the results of Hutchison and Cavendish.

  Standard Chartered Securities research manager Stanley Ng Wing-chark said the case of Husky Oil would not necessarily dim investors' confidence in other oil companies.

  ''The problem with Husky is its low-yield oil and gas fields. When oil prices drop, companies operating on low-yield fields suffer because they may not be able to reach its break-even point,'' said Mr Ng.

  ''But an oil company's performance depends on a lot of operational details. Without knowing them, it is very difficult to comment on the deal,'' he added.

   In a document issued by solicitors acting on behalf of Westcoast Energy, group chairman and chief executive officer Michael Phelps said Westcoast Energy would use proceeds from the sale to reduce the borrowing incurred to finance the $600-million Union Energy acquisition.

   ''When the acquisition of Union Energy Inc was announced last November, Westcoast indicated its intention to divest all or part of its interest in Westcoast Petroleum,'' said Mr Phelps.

  ''This was part of the company's strategy of focusing more exclusively on the natural gas business.''   Westcoast Energy plans an equity issue shortly to proceed with the acquisition financing programme.



Investors buy oil firm