Property group Lai Sun Development (LSD) has confirmed it will redevelop its Furama Hotel in Central but said it will use cash-rich subsidiary Lai Sun Hotels International (LSHI) to pay for the HK$2.15 billion project. LSD, chaired by convicted tycoon Lim Por-yen, said in a statement yesterday that the 500-room Furama Hotel would be demolished in 2001 to make way for an office, retail and hotel complex - the hotel portion of which would be purchased by a subsidiary of LSHI. The statement follows the suspension on Friday of three of the group's listed companies, including Lai Sun Garment (International). Both LSD and its 52.17 per cent-owned LSHI have been working their way through asset-disposal programmes in the past year to raise cash, culminating in the sale by the hotels arm earlier this month of its 49 per cent stake in the Four Seasons Hotel in New York. The Four Seasons sale generated about US$140 million for the company. Under the deal, LSHI will pay an immediate deposit of HK$964.9 million to LSD. The balance of HK$935.07 million owed by LSHI would be paid upon completion of the hotel in October 2004, LSD said. The company also emphasised that the adjacent Ritz-Carlton Hotel would not be part of the Furama redevelopment plan. Ever since LSD bought the Furama Hotel in an aggressive HK$7 billion takeover in mid-1997, speculation has mounted that the Furama and the Ritz-Carlton would some day be combined to create the single largest property on the east side of Central. But while the Ritz-Carlton is being excluded from the project, LSHI, which owns 65 per cent of the five-star hotel, said it would embark on an improvement programme including construction of a footbridge linking the two properties. This programme for the Ritz-Carlton, together with the fitting out of the new hotel next door, will cost about HK$250 million. It is believed this sum will also be paid for by LSHI. LSHI also said management of the two hotels would in the future be combined into a single entity to maximise efficiency. The new hotel - at 190 rooms and 15,757 square metres - will be significantly smaller than the 32,849 sq metre Furama it replaces. Taking up the extra space will be a retail podium and office tower, both of which will remain LSD assets. The retail space will account for 4,707 sq metres while the office space will measure 20,740 sq metres. There will be 32 car parking spaces. The deal will bring in much-needed funds for LSD, which raised HK$834.5 million via a 94.4 per cent subscribed rights issue completed at the start of the month. Separately it had raised an estimated HK$3 billion from asset sales by the end of last year. Lim, whose Lai Sun Garment holds 44.76 per cent of LSD, returned to Hong Kong on bail last week while he appeals against a three-year sentence for bribery and corruption in Taiwan.