Developer Joins Bid For Shaw Brothers

Source : The Business Times, May 27, 2008

Yeung Kwok-keung has HK$3b loan from chairman of Henderson Land

A GUESSING game over who will bid for Run Run Shaw's flagship Shaw Brothers intensified over the weekend as a property developer emerged as a prime contender.

Businessman Yeung Kwok-keung has received HK$3 billion (S$523.2 million) in financing from Henderson Land Development chairman Lee Shau-kee to make a bid for Shaw Brothers, according to local press reports.

Mr Yeung is chairman of mainland property company Country Garden (Holdings), and his apparent interest in the media firm has perplexed some observers, fuelling speculation that he may be a front man for another interested party.

Earlier this month, media tycoon Mr Shaw announced that he is looking to sell his stake in entertainment flagship Shaw Brothers, the largest shareholder of Hong Kong's No 1 broadcaster.

According to an announcement by Shaw Brothers, the 100-year-old media veteran is in talks with 'representatives of interested parties' regarding a possible sale.

Mr Shaw holds 75 per cent of Shaw Brothers, a holding company with a 26 per cent stake in Television Broadcasts (TVB), Hong Kong's leading broadcaster.

Shaw Brothers said that no agreement has been reached on a sale, but press reports have tipped a number of private equity firms to be interested in the stake, including the Tianjin-based Bohai Fund and the Blackstone Group, run by former financial secretary Antony Leung.

The apparent interest of Country Garden's Mr Yeung is one of the less obvious ones, although there are suggestions that he may be interested in the property assets of the company. Shaw Brothers has a large property jointly held in Clearwater Bay in the New Territories.

It is understood that the company has for some time been trying to get planning permission to develop the large plot into a residential area.

'He (Mr Yeung) is a property developer, so it's natural for him to be interested,' said Allan Ng, executive director of investment bank BOC International. 'But that piece of land has taken the company years to get government approval for redevelopment.'

One of the main stumbling blocks has been to improve road access to the site, which is situated along a busy stretch of road in the New Territories.

Henderson's Mr Lee told reporters that his loan to Mr Yeung did not reflect any interest to become involved in the operations of Shaw Brothers or TVB.

A sale to a Hong Kong or Chinese bidder, however, would ease any concerns which Beijing might have that the stake remains in local hands.

In 2006, a bid by PCCW boss Richard Li to sell to foreign investors was thwarted after politics seemed to come into play.

It has long been expected that Mr Shaw would seek to offload his stake in the media company, given recent bouts of ill health. In 2006, the tycoon was believed to have discussed a possible sale with a consortium of local tycoons.

Analysts had suggested that Rupert Murdoch's Newscorp and Malaysian broadcaster Astro could be potential buyers, but were given slim chances because of their foreign status.

TVB in March announced that its net profit last year rose 6 per cent to HK$1.26 billion as advertising revenue increased against the backdrop of a robust economy.

The company also recorded a one-off gain of HK$140 million during the year from a sale of a 20 per cent stake in unit TVB Pay Vision Holdings Ltd. Turnover during 2007 was HK$4.33 billion, up 3 per cent from 2006.

Revenue from terrestrial television broadcasting rose to HK$2.37 billion from HK$2.2 billion the previous year.