Hong Kong defends funding for Disneyland

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SAN FRANCISCO -- A Hong Kong government official deflected criticism regarding the Chinese territory's share of the funding for the Hong Kong Disneyland project, to be built on Lantau Island.

Michael Lee, director of the Hong Kong Economic and Trade Office here, said the $2.88 billion that Hong Kong is investing includes other tourism endeavors on the island as well as the Disney project.

Lee rejected assertions from Hong Kong opposition politicians that the government is investing a disproportionate amount.

He said the $2.88 billion figure includes $1.74 billion the government will spend to improve Lantau Island's infrastructure, in addition to the nearly $420 million in equity and $720 million in loans it is committing to the theme park joint venture, called Hong Kong International Theme Parks Ltd. (HKITP).

"The supporting infrastructure [$1.74 billion] is what the government is going to spend anyway to develop Lantau Island," said Lee.

As reported, the Walt Disney Co. and the Hong Kong government earlier this month agreed on the joint venture to develop the theme park on a 310-acre site in the Penny's Bay area of Lantau Island, about seven miles from downtown Hong Kong. The deal is subject to the approval of Hong Kong's legislative and executive councils and Disney's board of directors.

Under the agreement, Disney will invest $314 million in the project, for a 43% stake, while Hong Kong's equity investment will give it a 57% share. Lee added that under the agreement, the Hong Kong government "can divest, or sell our shares, one year after the opening of Hong Kong Disneyland." Disney, on the other hand, will be required to hold a minimum of 1.9 billion shares in the project.

"Disney cannot cash out on this investment -- ever," Lee said.

Lee said the theme park will charge between $30 and $35 for admission and is expected to draw more than 5 million visitors in its first year, which should rise to about 10 million per year after 15 years.

About 78% of the traffic is expected to come from Hong Kong, mainland China and Taiwan, Lee said. U.S. visitors should account for about 8% of park attendees, Lee said.

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