The HK$216.9 million special dividend paid to original shareholders of restaurant operator Hon Po Holdings (Lobster King) will not drain cash from the mainboard listing candidate, according to management. Financial controller Tony Wu said yesterday the dividend was declared as part of a restructuring to separate its core restaurant business from its property business, which would be retained by the original shareholders. 'The dividend's declaration will help avoid future connected transactions between the listed company and the holding company,' he said. Although the dividend has not resulted in cash outflow, it caused a decline in the company's asset value. Hon Po, which operates a chain of 17 Chinese restaurants, is planning to raise between HK$35 million and HK$56 million by selling 70 million new shares at between 50 HK cents and 80 HK cents each, sources said. Existing shareholders, including founder and managing director Cheung To-sang and his wife, assistant general manager Grace Cheung, plan to cash in HK$15 million to HK$24 million by selling 30 million shares. With shrinking consumer spending and growing competition from mainland restaurants, Hon Po's net profit fell 42.6 per cent year on year in 2000 to HK$25.68 million, as turnover dropped 11 per cent to HK$872.2 million. In 1999, net profit fell 6.9 per cent to HK$44.8 million while turnover fell 2.2 per cent to HK$980.9 million. However, Mr Wu said the company met the stock exchange's minimum profit requirement. Mrs Cheung shrugged off concerns competition from mainland restaurants would continue to put pressure on profitability, saying the 'go-north' consumption trend was only a fad. Hon Po plans to open one or two restaurants in the next two years, and set up a food product-manufacturing business for Chinese festivals in Hong Kong. The mainboard listing plan followed the collapse of a reverse takeover deal with debt-troubled electronic component-maker Albatronics (Far East) last year.