Disney expansion deal a step closer

The expansion of Hong Kong Disneyland has moved a step closer and a deal will be finalized soon, according to Financial Secretary John Tsang Chun- wah.

Tsang made the disclosure on his return from Los Angeles where he met Disney chairman and chief executive Bob Iger.

Walt Disney Parks & Resorts worldwide external communications vice president Tasia Filippatos said the theme park was encouraged by the recent discussions regarding the expansion of Hong Kong Disneyland.

"We are optimistic we will be able to finalize a deal to move forward on exciting new plans for the park," Filippatos said.

A source said the government will forgo a HK$6.1 billion loan.

The loan, instead of being repaid, will be converted into capital expenditure to finance the second phase expansion so the government will not need to seek new funding from the Legislative Council.

Disney will chip in HK$7 billion with more than HK$3 billion being used to pay off loans. The rest will be used to finance the expansion.

The expansion will include three new themed areas. Construction can commence within two to three months of the agreement being signed.

The new themed areas will open gradually. The entire project will be completed in two to three years before an expected opening of the Shanghai Disneyland in 2014.

Last December, Hong Kong Disneyland's managing director Andrew Kam Min-ho said the Hong Kong government would not have to spend a cent in the proposed HK$3.5 billion plan proposed by Disney and would still remain the major shareholder of the joint venture operating the park.

In March, Disney fired about 30 Hong Kong-based designers and engineers, citing uncertainty over the negotiations. This was seen by critics as a tactic to pressure the government to compromise on the deal.

A source said there is a chance the design team will be expanded again, but it is unclear whether the sacked staff will be re-employed.

Legislative Council member on the economic development panel, Fred Li Wah-ming, said the government had no choice but to accept a deal to convert the loan into capital expenditure.

"It seems that the government is paying nothing at all, but in reality it is like lending money to a gambler. You were supposed to get it back but now you are being forced to participate in the gamble," Li said.

He said an expansion is necessary to save the theme park, but if it continues to underperform and more capital injection is needed, the government will have to consult Legco and the public.