Group aims to expand its Causeway Bay flagship after debt restructuring and higher room rates spur profits Regal Hotels International Holdings plans to raise a syndicated loan of at least $4.26 billion to finance expansion. The loan, which is being planned as sentiment in the hotel industry improves, would refinance existing debt and provide fresh capital for expansion. Chairman Lo Yuk-sui described the loan as 'huge', adding that it would be larger than the company's existing loan of $4.26 billion. The money is earmarked for a new extension to the Regal Hong Kong Hotel in Causeway Bay and to upgrade other hotel properties. 'We plan to add 20,000 square feet, or 50 to 60 rooms in the hotel,' Mr Lo said. No additional land premium needs to be paid as the plot ratio allowance of the hotel site will not be exceeded. 'The group is also assessing various proposals for the more effective use of the under-utilised space within its hotel properties,' Mr Lo said. He spoke as his group of companies - Century City International Holdings, Paliburg Holdings and Regal Hotels - announced interim results. The companies have been highly geared since the value of their investments plunged after the property bubble burst. Mr Lo said the companies' financial positions were substantially improved following a series of asset disposals and debt restructuring, as well as the pick-up in the economy. Regal Hotels yesterday announced a net profit of $285.1 million for the six months to June, compared with a net loss of $69.1 million for the year-ago period. The company reaped a one-off gain of $165.8 million from a write-back for impairment at Kowloon City's Regal Oriental Hotel, which used to serve Kai Tak airport. Its average room rate has improved by about 11 per cent during the period. It booked a $59.3 million profit from sales at its 70 per cent-owned Regalia Bay project in Stanley. More profit contributions will be booked in the second half from the sale of the remaining 50 houses and a write-back for impairment at the Regalia Bay project. Mr Lo, however, did not say how much. Basic earnings per share was 3.6 cents, against a loss 1.1 cent per share in the year-ago period. Paliburg, which owns 45 per cent of Regal, saw net profit rise 706.96 per cent to $127.5 million, helped by improved property sales and a contribution from Regal. Paliburg plans to build a resort hotel and entertainment project at an investment cost of up to $1 billion on Sharp Island, Sai Kung. Basic earnings per share was 2.8 cents, against 0.6 cent per share in the same period last year. Century City's net profit fell to $36.7 million, compared with a net profit of $283.1 million in the same period last year. Earnings per share was 0.7 cents. The decline in net profit was the result of an accounting recognition of the disposal of a shareholding in Paliburg. Mr Lo said Century City was continuing debt-restructuring talks with its creditors, a process already completed by Paliburg and Regal. The three companies did not declare interim dividends. 'We have not paid a dividend for several years. We are reconsidering our dividend payout policy as business picks up,' said Mr Lo.
