Conglomerate Wharf (Holdings) faces potential damages payments of HK$1 billion this year from legal action against it in Hong Kong and the United States. Wharf yesterday said it would have to shoulder responsibility for about HK$400 million in damages awarded last month against Wheelock Marden & Co, which it took over in 1985. Wharf also is embroiled in a trial in the US city of Denver where United International Holdings, a cable television management company, is suing it for about US$70 million in damages. Analysts said the two payouts, if they arose, would cut Wharf's profits this year by as much as 25 per cent. Johnny Wong, investment analyst at ING Baring Securities, said: 'The charges will hit Wharf hard.' He said the Hong Kong litigation alone could shave 10 to 12 per cent off its net profits. The damages were awarded against Wheelock Marden in favour of Danish Shipping Finance on March 25 after a six-month legal battle. Danish Shipping claimed Wheelock Marden failed to provide a true picture of its financial position when borrowing money in 1983 and 1984. Wharf assumed the liabilities of Wheelock Marden when it took over the struggling British-owned conglomerate in 1985. A subsequent restructuring saw Wheelock Marden's operations transferred to the current Wheelock, but Wharf retained the liabilities associated with the litigation. Wharf has the right to appeal against the decision, handed down by Mr Justice Barnett, but yesterday remained silent about whether it would do so. Gary Shing, head of corporate affairs at Wharf and Wheelock, said: 'The whole thing is not finalised. We are waiting for our counsellors and they will decide.' The total amount Wharf may have to pay includes HK$226 million in damages, plus 13 per cent interest, and costs associated with the trial. Analysts expect the final figure to be about HK$400 million. The damages associated with the US litigation are expected to be even greater. United International, which supplies management services to multi-channel television providers, said Wharf asked it to lend expertise to a bid for a cable franchise in Hong Kong while misleading it about its ultimate right to invest. The six-week trial now taking place in Denver began on February 18 and is expected to end early next month. United International wants a 10 per cent stake in the cable franchise under an oral agreement made with Wharf Cable managing director Stephen Ng in 1992. The case began after an attempt by Wharf to dismiss various claims by the US company failed, as did its efforts to shift the venue of the trial to Hong Kong. United International has launched more than 20 channels in six countries in the past six years, including creative partnerships with HBO, Time Warner, Disney/ABC and News Corp. Analysts said Wharf should be able to dispose of the two charges without endangering its ongoing projects, but they would damage the bottom line. Peter So, assistant director at Schroder Securities Asia, said: 'Wharf's balance sheet is very large. A company like Wharf should be able to finance that. 'The damages claims should not affect core earnings but I will wait for the final decision before changing my forecast for net earnings.' Another analyst said Wharf might be able to allocate the damages payout to Danish Shipping to its already released 1996 earnings. That would mean the 23 per cent fall Wharf posted for the year might turn out to be a 35 per cent slump.