HK bus companies set for merger
( 2003-12-10 14:38) (China Daily HK Edition)
NWS Holdings and Chow Tai Fok Enterprises yesterday said they would merge their transport businesses, including two of Hong Kong's major bus operators and the Hong Kong-Macao ferry.
NWS Holdings, a unit of property conglomerate New World Development, will take a 50 per cent stake in Merryhill Group, which is now owned by New World parent Chow Tai Fok. Both Chow Tai Fook and New World Development are controlled by the family of Cheng Yu Tang.
Upon completion of the merger, both NWS' New World First Bus Services and Citybus will become member companies of Merryhill, but the two bus companies will continue to operate under their own franchises and run separate route networks and bus fleets.
"The realignment will benefit the travelling public and the synergistic benefits will enhance shareholders' value ultimately," Henry Cheng, chairman of NWS Holdings, said at a press conference.
Cheng said the transaction will help New World Development achieve its target of lowering debt by HK$3-HK$4 billion (US$385-US$513 million) for the year. New World had debt of about HK$31 billion (US$3.97 billion) in October.
Merryhill has secured a HK$3.3-billion (US$423 million) bank loan that will help refinancing the two bus companies' existing borrowings at better terms.
NWS' net debt will be reduced to HK$5.4 billion (US$692 million) from HK$6.9 billion (US$884.6 million) and its gearing ratio will be lowered to 49 per cent from 62 per cent, according to the company.
"We hope to lower NWS' gearing to about 30 per cent by mid-2004 after finishing the sale of several infrastructure projects," the company's spokesman Kwan Chuk Fai said.
Cheng said the pooling of the bus businesses will not result in any laid-off frontline staff. However, the company will look for a reduction at the managerial level by attrition to lower operating costs.
He said the two bus companies would rationalize overlapping bus routes.
"Such arrangement will benefit the public as service quality of the two bus companies will be improved, as well as traffic conditions," Cheng said.
He said there would be no further discount on bus fares as the two bus companies had already reduced fares by at least 7 per cent in October.
"However, we are exploring the possibility of introducing an Island Pass or a more extensive Bus-Bus-Interchange schemes across the First Bus and Citybus networks, so that passengers can enjoy more concessions," he said.
Cheng said the new move will not create a monopoly.
According to Kwan, the two bus companies, as a whole, take up only 10 per cent of the public transport market. In comparison, KMB, another major bus operator in Hong Kong, has 73 per cent of the local bus market.
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