China Post Group Corp sold 11 of its star-rated hotels to a subsidiary of Hong Kong-based VXL Capital Ltd on Friday, a major step toward getting rid of its non-core businesses.

Following its reorganization in late January, the company decided to focus on its core postal businesses to make it more efficient and competitive.

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"This first hotel asset transfer is an important move in our strategic restructuring - to cut non-core assets and move away from non-core businesses," said Wang Biao, director of the general office of China Post.

"It is also a valuable experiment in listing State-owned hotel assets for public bidding," Wang said at a ceremony in Beijing marking the signing of the asset-transfer agreement.

China Post selected the first batch of 30 hotels in March and has listed 25 on Shanghai United Assets & Equity Exchange (SUAEE) for trading since April 23, with more deals expected soon.

And the company plans to list more of around 400 hotels on SUAEE for asset trading.

"We are likely to finalize the deals on the 30 hotels by the end of 2007, and will then proceed with the next batch. By the end of 2008, all the hotels will be available for trading on the SUAEE," said Ren Yongxin, deputy general manager of China Post's financial department.

The sale of its hotel assets is part of a wider move by China Post to get rid of its non-core businesses.

"We have about 1,000 properties in the non-core sector, ranging from hotels and hospitals to printing facilities," Ren said.

The 11 hotels sold on Friday are in Hubei, Shandong, Jilin, Sichuan, Shaanxi and Gansu provinces, and the Xinjiang Uygur Autonomous Region.

The buyer, VXL Capital Ltd, which is primarily engaged in property investment and financial services, aims to tap into the mainland's huge hospitality market by creating a chain out of the 11 hotels.

According to VXL Capital CEO Percy Archambaud-Chao, the company spent over 200 million yuan to acquire the 11 hotels.

"We will invest more in the hotel sector on the mainland over the next few years," he said. The company's long-term goal is to build a 500-strong hotel chain across the country.

(China Daily 06/09/2007 page10)

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