Hopewell in pact to sell power plant

Hopewell in pact to sell power plant

HONG KONG (Reuters): Hong Kong-based Hopewell Holdings Ltd.'s chairman Gordon Wu said on Thursday that the company has reached a provisional agreement with the Indonesian government to sell its interest in a stalled power station project.

Wu told reporters at a construction conference in Hong Kong that Hopewell would sell its 80-percent stake in the Tanjung Jati B project to the Indonesian government, which would get a soft loan to finance the acquisition.

Wu declined to give further details but said the sale, which would finally resolve one of the nagging disputes concerning Hopewell's infrastructure projects in Southeast Asia, would be a "win-win loss" for the company.

"The only question now is whether the company will recover the investment in full, although management expects to get about US$200 million back," said Kim Eng Securities analyst Mark Po.

The company made a provision of HK$4.4 billion (US$564 million) against the cost of its investment in the project in its 1997/98 results.

Hopewell shares rose 3.76 percent to HK$4.825 on the news but then eased to close the morning session 2.69 percent higher at HK$4.775. Analysts expect the stock to see more upside since it was trading at a substantial discount to an estimated net asset value of HK$13 per share.

Hopewell has been trying to recover its investment in the project since it was halted in February 1999 when Jakarta announced the rationalization of its independent power projects.

Tanjung Jati B power station, once completed, will have a generating capacity of 1,320 megawatts and is located in Central Java, Indonesia.

Wu also said that Hopewell expected to complete talks with the Hong Kong government in the next few months on its planned Mega Tower Hotel in the busy Wan Chai district.

The plan, approved in 1994 as a 1,000 room, 93-storey hotel, has been hamstrung by Hopewell's failure to acquire sufficient land in the densely built area. Wu said on Thursday, however, that the completed hotel would have 1,500 rooms.