Hong Kong property sale to ease pressure on Swire

HONG KONG -- S&P Global Ratings said today that the sale of Swire Pacific Ltd.'s Hong Kong Cityplaza One office tower will modestly ease pressure on the company's diminishing financial headroom following the bailout of its associate company, Cathay Pacific Airways Ltd.  

"In our view, Swire will regain some financial buffer following the divestment," the ratings agency said. "A portion of the cash proceeds will likely be used for debt reduction.

"We estimate the company will receive at least about HK$7.68 billion by the end of 2020, excluding transaction costs. That said, Swire remains exposed to event risk, given the operational uncertainty on CX."

Swire on November 9 announced that it had signed a sale and purchase agreement with a Gaw Capital Partners-controlled buyer of the Cityplaza One property for a consideration of about HK$9.85 billion.