Hong Kong tycoon Cheng seeks sale of some Rosewood Hotels

Hong Kong tycoon Henry Cheng is seeking buyers for properties in the family’s luxury Rosewood Hotel Group as the billionaire clan races to overcome liquidity challenges connected to its real estate unit New World Development. Cheng’s representatives have approached some companies for a possible sale of assets in the Rosewood portfolio, according to people familiar with the matter. The discussions were preliminary and could be subject to change, the people said. The Rosewood operation, led by Henry’s daughter Sonia Cheng, is owned by the family’s closely held investment vehicle Chow Tai Fook Enterprises. The company bought the former entity that owned the hotel operations and its shareholder’s loan from a subsidiary for HK$1.96 billion ($252 million) in 2015. Ever since the Chengs acquired the U.S.-based brand in the early 2010s, Sonia has built the hotel chain into a recognized name in the high-end hospitality market. The group has 58 properties around the world, according to its website. The company’s flagship location overlooking Hong Kong harbor garnered the top spot in the World’s 50 Best Hotels rankings this year. It was valued at HK$15.9 billion ($2 billion), according to a deck seen by Bloomberg for a debt swap plan proposed by New World. Representatives for the Rosewood and Chow Tai Fook Enterprises didn’t immediately respond to Bloomberg requests for comment. Empire unraveling The potential sale of Rosewood properties comes as New World — the most indebted major developer in Hong Kong — is seeking to offload assets to improve its cash flow. The Cheng family was looking for a partner to match a potential capital injection of about HK$10 billion ($1.3 billion), but talks have stalled, people familiar with the matter said in November. In its latest attempt to improve liquidity, New World announced plans to issue up to $1.9 billion ($244 million) of new debt in an exchange offer that includes haircuts for bondholders of as much as 50%. The company’s net debt reached 98% of shareholder equity at the end of June, according to Bloomberg Intelligence. Attempted divestments of the family’s other assets have been halting. In August, the family’s infrastructure arm CTF Services decided to pause the sale of a collection of roads worth $2 billion in China. The clan is also trying to sell its high profile 11 Skies shopping mall near the Hong Kong International Airport, people familiar have said. In late September, New World raised a HK$3.95 billion ($507 million) bank loan secured by its crown jewel asset Victoria Dockside, 75% less than the upper end of its original target. It also posted a second straight year of losses of HK$16.3 billion ($2 billion) from continuing operations. New World booked an impairment loss of HK$2.7 billion ($347 million) after revising the valuation of its 11 Skies airport mall, it said in September. The company has been in talks with Hong Kong’s airport authority to explore any possibility for changes in the contractual arrangements of the project, it said then. By Faris Mokhtar and Shirley Zhao

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Hong Kong tycoon Cheng seeks sale of some Rosewood Hotels