First Pacific Co is to sell its stake in Dutch-based marketing and distribution company Hagemeyer for up to US$1.6 billion as part of a sweeping strategic review aimed at shoring up its troubled finances.
The company announced yesterday a disposal and investment programme involving the sale of assets worth US$2 billion, a huge debt reduction exercise and a series of investments in its troubled subsidiaries.
The decision to sell its 40 per cent stake in Hagemeyer - one of its most valuable assets - is one of the strongest signals to date that Hong Kong companies will not escape the Asian economic crisis unscathed.
Hagemeyer contributed US$67 million towards First Pacific's operating profit of US$234 million in 1996, by far its largest profit contributor.
The move follows on the heels of problems at Peregrine Investments Holdings which faces collapse due to the sharp devaluation in the Indonesian rupiah.
The Hagemeyer sale comes weeks after First Pacific - part of Indonesia-based businessman Soedono Salim's Salim Group - attempted to boost its financial position with the sale of its 65 per cent stake in Pacific Link Communications to Hongkong Telecom CSL for HK$4.83 billion.