Hong Kong Airport Authority May List In 4Q Of 2005 At Earliest

Tuesday March 2, 2004 

HK Airport Authority May List In 4Q Of 2005 At
Earliest
Yahoo News

HONG KONG (Dow Jones)--The process of preparing Hong
Kong's Airport Authority for listing should take at
least until the final quarter of next year, Deputy
Secretary for Financial Services and the Treasury
Martin Glass said Tuesday. 

"It might be more than a year away," before the
Legislative Council enacts a bill for the
privatization of the authority, allowing the operator
of Hong Kong's international airport to be listed,
Glass said after meeting with legislators. 

The government is holding consultations with the
Legislative Council Panel on Economic Services on the
privatization of the Airport Authority. Among concerns
raised by legislators are labor issues, the use of
land, and various regulations governing the authority
after its privatization. 

At the of March, the government will submit plans for
the Airport Authority to carry out a capital
restructuring by returning HK$6 billion of its HK$36
billion equity capital to the government, Glass said.
The equity transfer will raise the authority's
debt-to-equity ratio to 1:2 from the present 1:4, the
government said previously. 

Such a move first requires amendments to the Airport
Authority Ordinance to allow for the equity transfer.
Glass said he hopes lawmakers will approve these
changes by July. 

The Airport Authority had previously said it would
look into various options, including bank borrowing
and retail bonds, to finance the HK$6 billion it is
paying the government. 

Once the Ordinance is amended and following further
discussions between the government and legislators,
the government is to draft a bill on the privatization
by the end of the year. 

If all goes well, the privatization bill could be
passed in May or June next year. This would be
followed by six-months of preparation for the initial
public offering, which involves various procedures
including due diligence and preparing the IPO
prospectus. 

Glass said the government would look to retain a
majority stake in the Airport Authority in the long
term. 

"For the foreseeable future, we would not go below
51%," Glass said. 

Glass said the Airport Authority's initial public
share sale would "probably" reduce the government's
stake to 75%. Further down the road, the government
could look into the option of selling a further 24% in
a second share offer. 

While the government will probably use the
privatization of MTR Corp. (0066.HK) as a guide for
preparing an Airport Authority listing, it isn't a
certainty that the two cases will be similar. 

"We have to approach this based on the merits of the
market conditions... MTR is the only model we got, but
it may turn out to be quite different," Glass said. 

In 2000, the government privatized MTR through a
HK$1.14 billion share offer lead managed by UBS
Investment Bank (UBS). 

UBS has also been appointed to advise the Hong Kong
government on the privatization of the Airport
Authority. 

MTR is currently 77%-owned by the government. 

The government had earlier planned to sell further
shares in the rail operator, but that has been
repeatedly put on hold for various reasons, including
unfavorable market conditions and the intended merger
of MTR with its unlisted rival Kowloon-Canton Railway
Corp. (H.KCR). 

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