Hong Kong LegCo Approves Disneyland Expansion Plan
    2009-07-11 00:03:19     Xinhua      Web Editor: Cao Jie
The Hong Kong Special Administrative Region (HKSAR) Legislative Council (LegCo) on Friday approved an expansion plan of Hong Kong Disneyland agreed upon by the HKSAR government and the U.S.-based Walt Disney Company.
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The Hong Kong Special Administrative Region (HKSAR) Legislative Council (LegCo) on Friday approved an expansion plan of Hong Kong Disneyland agreed upon by the HKSAR government and the U.S.-based Walt Disney Company.

The finance committee of the LegCo approved the expansion plan 28 to 5, with 10 others abstaining from voting. Some of the lawmakers called for more transparency in the operation and financial condition of the theme park.

Secretary for Commerce and Economic Development Rita Lau said that the theme park was one of the key tourism infrastructure projects in Hong Kong.

"It takes time to get the returns on such an investment," she said.

Under the plan, the Hong Kong Disneyland was expected to add three themed areas and expand the world's smallest Disneyland theme park by 23 percent in terms of land area.

Hong Kong Disneyland Resort Managing Director Andrew Kam said he was excited by the approval of the expansion plan which would inject more "energy" into the park.

Constructions on the three new themed areas will begin in phases within five years, with the first expected to be completed within two years and a half, he said.

The theme park is a joint venture by the HKSAR government and the United States-based Walt Disney Company, with the former holding a stake of 57 percent at first. The park was inaugurated in September 2005 but the performance during the first year was unsatisfactory, although the details had not been fully disclosed.

The HKSAR government and Walt Disney have been in talks on the expansion plan over the past two years, with the resulting agreement finally announced at the end of June.

Under the agreement, Walt Disney will inject the capital of 3.49 billion HK dollars (447.4 million U.S. dollars) into the joint venture to cover the cost of expansion construction and operation. It will also convert the entire outstanding balance, projected to be 2.76 billion HK dollars (353.8 million U.S. dollars), of its loan to the joint venture to equity.

The HKSAR government will convert part of its outstanding balance of its loan to the joint venture to equity over five years, but will inject no more capital. The involved amount was estimated to be 6.25 billion HK dollars (801.3 million U.S. dollars).

The arrangement will allow the HKSAR government to retain an outstanding loan balance of no less than one billion HK dollars at the end of the five years. Its stake in the joint venture was projected to drop from 57 percent to 52 percent.

Kam said Walt Disney, who has been managing the park, would release the key financial results and the attendance each year starting from 2008 to 2009.

The joint venture was projected not to earn an annual net profit of 100 million HK dollars until the 2014-2015 financial year, and it will take 20 to 40 years for the HKSAR government to recover its investment. (7.8 HK dollars = 1 U.S. dollar)

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