Hong Kong property development group New World Development has concluded a deal to sell its entire stake in the Kai Tak Sports Park project to its parent company, Chow Tai Fook Enterprises (CTFE).
New World initially announced in September that it was in talks over a deal as it detailed wider restructuring plans following the declaration of its first financial loss in two decades. Kai Tak Sports Park Ltd (KTSPL) was formed as a subsidiary of New World and NWS Holdings to oversee the design, build, construction and operation of the multi-venue development, which is now nearing completion.
New World had held a 75% stake in KTSPL, with the remainder controlled by NWS Sports, a subsidiary controlled by conglomerate NWS. New World yesterday (Thursday) declared that it has entered into a sale and purchase agreement with CTFE through which the latter will take full control of its KTSPL stake at the consideration of HK$416.7m (£42.17m/€50.68m/$53.54m).
New World in September reported a net loss of HK$11.8bn from continuing operations and HK$7.9bn from discontinued operations for the year ending June 30, 2024, as opposed to a net profit of HK$548m during the previous 12-month period.
The company’s full-year revenues from continuing operations also dropped 34% year-on-year to HK$35.8bn, with Adrian Cheng announcing his resignation as CEO.
Explaining the reasons for and benefits of the KTSPL disposal, New World said: “Although the economy gradually recovered and the market regained vitality, the economic environment remains complex and volatile. The board has therefore been seeking to reduce the group’s financial leverage so that the group would be in a better financial position to face unexpected challenges in the coming years.
“Given that Kai Tak Sports Park is expected to commence operation in January 2025, it is estimated that additional external financing may be needed to support the initial operations of Kai Tak Sports Park, which is not in line with the current deleverage policy of the group.
“Having taken into consideration of the above, the board takes the view that the disposal is a good opportunity for the group to realise its investment in the project and generate net proceeds for adding to the working capital of the group, which will help accelerate the deleveraging process of the group.
“As Kai Tak Sports Park is a large sports infrastructure project with a comparatively small retail area, the disposal will also allow the group to focus its expertise on operating property projects with a strong retail element, being the group’s core business and strength.”
The KTSPL transaction has been approved by Hong Kong’s Culture, Sports and Tourism Bureau (CSTB), according to a separate government statement reported by the South China Morning Post.
“CTFE has assured the government of its commitment to dedicating resources to ensure the smooth construction progress of KTSP and to take forward the operation of the KTSP in partnership with the government,” the statement said.
The restructuring of KTSPL’s ownership comes after Kai Tak Sports Park this week introduced the new brand logo and names of its major facilities. They will operate under the following monikers: Kai Tak Stadium, Kai Tak Arena, Kai Tak Youth Sports Ground and Kai Tak Mall.
Kai Tak Sports Park said: “These names embody our commitment to fostering an inclusive environment where passion and connection thrive. Kai Tak Sports Park isn’t just a venue – it’s a symbol of inspiration for athletes and fans alike, where the worlds of dynamic play, entertainment, and community spirit converge.”
With regards whether naming rights partnerships are being explored for any of the facilities, a Kai Tak Sports Park spokesperson told TheStadiumBusiness.com that the current names will be used for the “foreseeable future”.
The complex staged its first test event on October 27 as Sai Kung faced off against Wong Tai Sin in a second-tier football match. Around 1,000 fans attended the match, which took place at the Youth Sports Ground. The 5,000-capacity venue will sit alongside the 50,000-capacity Kai Tak Stadium and a 10,000-capacity Kai Tak Arena.
The overall project is now in its final construction phase, with all facilities expected to be completed by the end of the year. Test events are set to continue until February to allow Kai Tak Sports Park to gain the necessary practical operational experience.
In September, Hong Kong’s Sports Minister Kevin Yeung said that Kai Tak Sports Park is on course to fully open by March, as Kai Tak Stadium achieved technical compliance status from the government.
