Hopewell Holdings shares jumped to a 12-month high on news of its possible disposal of an ill-fated Indonesian power plant project for HK$2.38 billion.
The infrastructure play finished the day 4.69 per cent higher at HK$6.70, with 8.69 million shares changing hands.
Yesterday, Hopewell said that if completed, it would make a profit of HK$1.67 billion from the sale of the Tanjung Jati power project in Central Java, which was suspended in 1998 as a result of the Asian financial crisis.
'It's good news for the company,' Hopewell deputy managing director Josiah Kwok Chin-lai told the South China Morning Post yesterday.
He declined to say whether part of the proceeds would be distributed to shareholders as a special dividend.
'We are identifying investment opportunities,' Mr Kwok said. 'If there are any, the proceeds will be reinvested.'
He added that the company was likely to write back about HK$1 billion on Hopewell's books for the financial year to June.
The pending sale marks the latest chapter in Hopewell's disastrous foray into Southeast Asia's power and infrastructure sector in the early 1990s.
A failed railway investment in Thailand and toll-road project in the Philippines are still pending resolution. Both projects have been suspended since 1998.
Construction of Tanjung Jati was suspended after the Indonesian rupiah depreciated sharply, forcing that country's government to freeze expensive infrastructure projects.
Following years of discussions with Indonesia's state electricity corporation - Listrik Negara (Persero) - Hopewell and its local partners finally reached agreement to sell the power plant to Sumitomo of Japan.
The plant is 80 per cent owned by Hopewell.
Hopewell invested HK$5 billion in the power plant and made a provision of HK$4.4 billion for it in 1998. This left the plant with a book value of just HK$600 million.
Hopewell said its share of sale proceeds - HK$1.67 billion - took into account HK$296 million owed to contractors and government authorities.
However, Mr Kwok warned the sale - due for settlement by May 31 - was still subject to a number of conditions. These included Sumitomo's receipt of government approvals for transfer of the plant's land and assets.
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