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Debt-laden property firm Paliburg Holdings' latest asset sale will be the $399 million disposal of a controlling stake in a residential site to Kerry Properties and Sun Hung Kai Properties.

 Paliburg, chaired by Lo Yuk-sui, has agreed to sell a 70 per cent interest in an Ap Lei Chau housing lot.

 Kerry Properties and SHKP will each own a 35 per cent effective interest in the site, which covers 180,512 square feet.

 Paliburg will retain 30 per cent in the development.

 The sale is seen as a means to ease the highly geared developer's burden.

 Mr Lo's empire, which includes Paliburg, its parent Century City International and Regal Hotels International, ran into financial difficulty after the Asian financial crisis and the property market crash.

 The group has been reported to owe about $7 billion to banks - including HSBC Holdings and Bank of East Asia - and must sell assets to pay its debts.

 China Travel Service Holdings (HK), one of the mainland's largest travel agents, has been named as potential buyer of a majority stake in Paliburg.

 Century City was also offering to sell a stake in Regal Hotels.

 Paliburg said yesterday it would receive $300 million from SHKP and Kerry on completion of the joint sale agreement within one month.

 The balance would be paid on fulfilment of certain conditions in relation to the rezoning process.

 Chew Fook Aun, financial officer at Kerry Properties, said Paliburg had approached the company about the sale.

 The site, close to the Aberdeen Marina Club, was attractive as it overlooked the Aberdeen South typhoon shelter and the Sham Wan area, Mr Chew said.

 Paliburg bought the land as a godown development site for $230 million at a government auction in January 1995.

 Last month, the government approved rezoning of the area as a residential project, which will allow for the building of more than one million sq ft of floor space.

 Terry Ip, a property analyst at Dresdner Kleinwort Benson, said taking into account the interest costs incurred in the past 4.5 years, Paliburg should still make a profit from the $399 million deal.

 However, he said the Ap Lei Chau site was one of the best in Paliburg's portfolio of properties.

 Charles Chan Chiu-kwok, a director at Chesterton Petty, said the land-use conversion would cost the developers about $1.8 billion in extra premiums.

 Market sources said Paliburg was looking for buyers for its luxury residential site in Stanley, a joint venture project with China Overseas Land and Investment.

 Also on the market are Kowloon City Plaza and a Tai Tam shopping arcade.



Kerry, SHKP take up Paliburg asset