Lai Sun trimming Furama stake as deadline looms

Lai Sun Development is selling a further stake in the Furama Hotel redevelopment as time runs short for the troubled property company to stay afloat.

The HK$463.33 million sale of an additional 20 per cent stake came to light yesterday with 10 days left for Lai Sun to complete a debt-restructuring programme.

The stake will be sold to CapitaLand and American International Group (AIG), which already hold a combined 70 per cent of the office project.

Lai Sun, controlled by chairman Peter Lam Kin-ngok, had debt of HK$8.19 billion on July 31 last year. With an estimated net asset value of HK$766 million, its debt-equity ratio stood at about 10.

The company's problems stem from its aggressive HK$7 billion takeover in 1997 of Furama Hotel Enterprises, a key asset of which was the Furama Hotel. Lai Sun is struggling to reach a compromise with creditors to restructure its debts by the end of this month. The latest stake sale is seen as a further effort to ease its debt problem.

Shares in Lai Sun were suspended yesterday pending an announcement by the company on the sale. The consideration in the latest transaction will be offset by about HK$416.66 million of debt owed by Lai Sun to CapitaLand and AIG and a pre-payment premium of HK$46.66 million.

The debt is part of a loan made by CapitaLand and AIG to Lai Sun under a HK$625 million term facility in 2001.