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SCMP Reporter

LI Ka-shing and CITIC Pacific have launched a takeover bid for Miramar Hotel and Investment valuing the company at $8.7 billion.

  The bid is the biggest seen on the stock exchange involving a major hotel group.

  Investors are being offered $15.50 a share and $8.50 a warrant, representing a premium of 4.7 per cent a share and a discount of 1.2 per cent a warrant in the issued share capital of the, until now, sleepy hotel-shopping complex group.

  CITIC Pacific, the listed mainland investment holding company under the State Council in Beijing, and Li Ka-shing's property flagship Cheung Kong said they wanted Miramar to remain listed and operate on an independent basis following a successful takeover.

  They said their takeover vehicle, Hall Rich Investments, will take the bid to a compulsory purchase under Hongkong company law should it get 90 per cent of the issued shares of Miramar.

  The offer price for shares amounts to a 114 per cent premium over the book value net asset value per share in Miramar of approximately $7.25.

   The estimated net asset value, on a diluted basis, calculated by Sun Hung Kai Securities stood at $14.47 a share, six per cent below the offer price.

  According to Corporate International, the owning interests in the group are 12.9 per cent at Goldberg Corporation SA and 21.3 per cent at Yeung Chi Shing Estates, totalling 34.2 per cent.

  The hotel group's shares were suspended yesterday pending the takeover announcement release, which came at midnight, last night.

  Over the past eight trading days Miramar shares have been the strongest performing index stock shares, rising 14.7 per cent, or 15.6 per cent ahead of the Hang Seng index, to $14.80 on Tuesday.

  The stock has risen 25 per cent on the month, 74 per cent since January 1 and has averaged $9.88 over the 12 months to the close on June 8, 36.2 per cent below the takeover offer price.

  Miramar owns the 500 room Miramar Hotel in Tsim Sha Tsui and 200,000 sq ft of commercial office space at Keewan Tower and 700,000 sq ft of similar space at Park Lane Square II.

  Low occupancy at the Miramar Hotel in Tsim Sha Tsui of 60 per cent has plagued the group compared to industry average of 80 per cent. Net debt is estimated at more than $500 million due to building costs of Park Lane II.

  In qualitative surveys of securities industry opinion toward index constituents, Miramar has been one of the poorest rated stocks in the index.

  Expansion plans announced by the group in the mid-1980s in China unwound after the Tiananmen Square massacre in 1989.

  It has shown a decline in profit in every annual financial period since then; falling from $134.12 million in 1989, by 14 per cent in 1990, 29 per cent in 1991 and another 40 per cent, to $42.77 million in 1991 since then.

    Shareholders equity peaked in 1990 at $4.09 billion and declined to $4.01 billion by March 1992.

    Estimate Directory market consensus forecasting indicates analysts are expecting the group to report a net profit over the 12 months to March 31, 1993 of $77 million, up 66 per cent.

   Earnings per share is expected to be 13 cents, up 61 per cent.

    In 1994 profits are expected to rise 108 per cent to $160 million, with earnings per share at 28 cents.

    Rich Hall Investment was incorporated in the British Virgin Islands on February 23 this year and has no business, other than making offers.

   The directors are Mr Larry Yung Chi-kin, Mr Henry Fan Hung-ling, Mr Patrick WS Chung, Mr Albert Chow Nin-mow, Mr Victor Li Tzar-kuoi and Mr Kam Hing Lam.



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CITIC and Li bid for Miramar