Debt-ridden developer Paliburg Holdings' recurrent income will be substantially reduced by the transfer of important assets to bondholders in a debt restructuring, according to analysts. However, the group's shares closed higher yesterday when trading resumed after the announcement of the long-awaited debt-restructuring proposal. Paliburg rose almost 3 per cent to 14 HK cents a share, while parent Century City International jumped 9.26 per cent to 5.9 HK cents. Regal Hotels International edged up 0.52 per cent to 19.2 HK cents. According to the restructuring scheme, Paliburg's HK$3.7 billion exchangeable and convertible bonds will be cancelled. In return, Paliburg will transfer two major property assets - Paliburg Plaza in Causeway Bay and Kowloon City Plaza in Kowloon City, with their secured loans attached - to the bondholders. Paliburg will also issue new shares, representing 16.7 per cent of its enlarged issued share capital, and transfer half of its 72.8 per cent stake in Regal Hotels to bondholders. These shares will be issued or transferred gradually in 12 months. Kenny Tang Sing-hing, associate director of Tung Tai Securities, said the scheme would be a short-term boost to stocks but the stimulation would not last long. He said Paliburg would lose properties that contributed 30 to 40 per cent of its rental income with the asset transfer. The remaining rental portfolio had only small-scale projects or mainland properties, while a development in Stanley might cause losses, he said. Mr Tang expected Paliburg would still need a long period to consolidate operations after the debt restructuring. Celestial Securities research head Herbert Lau Chung-kwan said the worst might not be over for Paliburg as its business fundamentals remained bad. Its hotel business was affected by the September 11 terrorist attacks on the United States and its Stanley luxury residential project might make a loss, he said. Mr Tang said Regal's position might improve because, with bondholders becoming major shareholders of the firm, it might facilitate the sale of hotel assets. He said sale talks had stalled because the original shareholders demanded high prices. Mr Tang said Century City's share price gained most because its gearing ratio would fall when Paliburg was no longer its subsidiary.