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Concern raised on spending by NWD

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An announcement by New World Development (NWD) that it expects to incur capital expenditure of more than HK$11 billion in the next 18 months has raised market concerns over a possible surge in its debt level.

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The spending plan was unveiled in a notice giving details of a planned US$300 million convertible bond issue first announced last month.

NWD said it had outstanding consolidated debts of HK$33.92 billion, an increase of 17.1 per cent from June 30 but in line with market expectation.

Of the debts, 47.2 per cent were in US dollars, including the equivalent of HK$6.15 billion in convertible bonds, and the balance was in Hong Kong dollars.

NWD expected to incur cash outflow of about HK$3.46 billion of capital expenditure for the six months to June 30, this year and about HK$7.75 billion in the financial year to June 30, next year.

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NWD managing director Henry Cheng Kar-shun said: 'Such capital expenditure will be primarily applied towards property development, infrastructure development and investment, telecommunications services and bus services.' .

Dresdner Kleinwort Benson property analyst Terry Ip said the expenditure was higher than expected.

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