Hong Kong to expand stake in Disneyland

Legislators vote 28-5 to approve the proposal

HONG KONG -- The Hong Kong Legislative Council Finance Committee on Friday approved an increase in Hong Kong government's equity in the joint venture with Walt Disney Co., through conversion of HK$6.25 billion ($806 million) of an existing loan to shares, for the expansion development of Hong Kong Disneyland in the next five years.

In what local media called "a lucky break," legislators voted 28-5 with 10 abstentions to approve the unpopular proposal. Legislators who voted for the proposal said they were in a catch-21 situation and described the proposal as "being hijacked," adding that the expansion proposal "is only a slightly less bad amendment to a very bad agreement." Legislators project a HK$100 million ($12.9 million) loss within the five years before the expansion is complete.

For the expansion development, to which the Walt Disney Co. will contribute $452 million, the Hong Kong government will not inject new capital. The expansion is scheduled to be completed before 2014.

The Hong Kong has already provided $420 million in equity and $725 million as a loan to the joint venture with the Walt Disney Co. since 1999, and has spent $1.4 billion on reclamation fees and related community facilities, along with $194 million to acquire 18.7 hectares of land adjacent to the site. The Hong Kong Disneyland site now amounts to 125.4 hectares, but only 72 of those are used for the existing theme park, including four themed areas and two hotels.

The new development will see the construction of three new themed areas, namely "Grizzly Trail," "Mystic Point" and "Toy Story Land," which will take up an area equivalent to 23% of the area of the existing park. A new 1000-room hotel is reportedly part of the development, but a government representative said no discussion had been held about a new hotel.