Shaw profit up, shares down

Bank backs out of $1 bil buyout bid

Related: TVB nears billion-dollar buyout

HONG KONG -- Shaw Brothers on Monday reported a 6% jump in profits for 2007 but saw its shares slide on news of the withdrawal of one of the banks backing an expected buyout.

One of the banks behind the syndicated $1 billion loan backing real estate tycoon Yeung Kwok-Keung's bid for the TVB owner has dropped out, debt industry newsletter Basis Point reported Monday.

The banks reportedly lined up behind Citibank on the Shaw bid included GE Commercial Finance, ICBC (Asia), Standard Chartered Bank (Hong Kong) and Sumitomo Mitsui Banking Corp. It was not clear which bank had withdrawn its support.

Market speculators said that the bank withdrawal will put the closure of the deal on hold as it could take more time for Yeung to raise funds.

Shaw Brothers stock dropped 3.7% on Monday to HK$22.3 ($2.86), paring 44% gains made over the last three months stimulated by talk of the sale.

The company's annual report released Monday showed annual profit of HK$311 million ($40 million) for the financial year ending March 31. This represented a rise of nearly 6% from the HK$294 million ($37.8 million) earned in financial year 2006.

However, gross revenue decreased to HK$58 million ($7.5 million) in 2007, down from HK$66.5 million ($8.5 million). Most revenue was earned from service fees at the one million-square-foot Shaw Studios, totaling HK$29 million ($3.7 million) in the 12 months through the end of March.

By contrast, revenue from theatrical distribution and royalties -- once the lifeblood of the Shaw business -- accounted for just HK$619,000 ($79,600) in 2007, about one-third of 2006's HK$2.2 million ($283,000).