Infrastructure firm NWS Holdings has agreed to sell one of Hong Kong’s largest franchised bus operations – Citybus and New World First Bus – for HK$3.2 billion (US$410.2 million), saying the objective of the deal is to save jobs in a coronavirus-hit business environment.
NWS, a unit of Hong Kong property developer New World Development, sold the firms to a consortium led by private equity fund Templewater Bravo in a cash deal, according to a filing with the Hong Kong stock exchange after trading hours on Friday.
Templewater Bravo will own more than 90 per cent of Citybus and New World First Bus after the acquisition.
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Last year, the bus companies suffered a 95 per cent plunge in profit after tax, to HK$8.9 million, even before the Covid-19 pandemic dragged down ridership. In 2018, its profit was HK$162.8 million (US$21 million).
NWS will record a HK$700 million (US$90.3 million) impairment loss as a result of the sale.
Templewater Bravo has pledged to ensure it is “business as usual” at the bus companies despite the difficult operating environment, according to an NWS press statement.
The buyer was founded by Investec Bank and Cliff Zhang, a former senior vice-president at conglomerate Chow Tai Fook Enterprises. Zhang also previously worked at the investment banking division of HSBC and Deutsche Bank in Hong Kong. Chow Tai Fook and NWS are part of property tycoon Henry Cheng Kar-shun’s family business.
“There is no change to the remuneration package, terms of employment and employee benefits, the objective being to ‘keep jobs, keep payroll, and keep benefits,’” the statement said.
An NWS spokeswoman confirmed that a meeting between senior management and stakeholders, including bus drivers, was held on Friday to ensure the deal would have minimal impact on daily operations.
The two firms employ more than 5,000 people and operate about 200 routes with a fleet of more than 1,700 buses.
Public transport has taken a hammering during the coronavirus crisis, with many people working from home, schools closed and public gatherings limited under social-distancing measures.
NWS chief executive Eric Ma Siu-cheung said the deal was in line with the group’s strategies and long-term goals.
“The additional financial resources generated from the transaction will allow the group to leverage on our strong foundation to capture the opportunities ahead,” he said.
The bus firms were among companies approved for the first tranche of the government’s Employment Support Scheme under the coronavirus relief package, which provides wage subsidies for six months at a monthly cap of HK$9,000 (US$1,200) per employee.
More than HK$51.3 million was disbursed to New World First Bus with a commitment headcount of 1,986 employees, and over HK$82.6 million to Citybus for a headcount of 3,352.
Shares of NWS Holdings rose 2.64 per cent to HK$6.60 on Friday.
Meanwhile, ridership at the city’s embattled rail operator, the MTR Corporation, slipped 34 per cent in July year on year.
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