Having learned a hard lesson, the firm will focus on more modest projects Embattled property developer Lai Sun Development has gone back to basics, with a strategy that will focus on turning industrial sites into residential developments. 'We did a pretty good job in buying old or industrial properties and redeveloping them into residential redevelopments in the 1990s,' director Keith Wu Shiu-kee said. 'Now we will go back to pursue this business model.' An almost fatal 1997 foray into Central, where Lai Sun proposed an upscale office development, came close to bankrupting the group after it paid almost $7 billion for the former Hotel Furama at the peak of the property market. Lai Sun intended to build a high-rent office tower on the site. Heavily indebted in the wake of the property-value collapse that followed the Asian crisis of 1997-98, Lai Sun has been caught for the past seven years in a painful debt-reduction exercise - selling off core assets including a major stake in the Hotel Furama redevelopment and Causeway Bay Plaza 1. Throughout this period, the company was engaged in a drawn-out battle with creditors as it sought to restructure debts and stave off bankruptcy. At the peak of its credit crisis in 2002, Lai Sun, controlled by chairman Peter Lam Kin-ngok, reported total debts of $8.19 billion. With an estimated net asset value of $766 million, its debt-equity ratio stood at about 10. But now the worst appears to be over. 'We have obtained the approval of our creditors and bondholders for the debt-restructuring and it will be completed by the end of this month or early [next month],' Mr Wu said. 'The completion of the restructuring will return the group to a positive net asset value of about 20 cents per share and cut our net debt to about $2.5 billion, with gearing down to 100 per cent. We are pretty clean and ready to think of our next move.' Having learned its lesson the hard way, the group will no longer embark on grand Furama-scale plans or seek to become a key player in Hong Kong's property market. 'We are happy to be a mid-cap developer,' Mr Wu said. Lai Sun is now mulling a plan to join forces with the Lim Por-yen family - which retains a major shareholding in the company - to redevelop industrial properties for residential use. 'The Lim family has a number of industrial buildings in Cheung Sha Wan, which is being transformed into a residential district,' Mr Wu said. 'Lai Sun may co-operate with it to enhance the industrial properties' values.' The company will not have any new development properties after the sale of serviced apartments at its Kimberley 26 development in Tsim Sha Tsui and Rolling Hills Phase Two in Yuen Long. According to South China Securities, the two projects are expected to yield $130 million for Lai Sun in the next financial year. Lai Sun's existing investment properties include a 65 per cent stake in the Ritz-Carlton Hotel in Central, 10 per cent of the Hotel Furama redevelopment (now known as AIG Tower) and Cheung Sha Wan Plaza. Mr Wu said the company had no immediate designs on Macau, where sister companies Lai Fung Holdings and eSun Holdings are developing a property and entertainment complex. As part of its debt restructuring, Lai Sun will also dispose of two hotels in Vietnam and its 10 per cent stake in the Waterfront development on top of Kowloon Station.