Hone Shee ready to sell asset-backed securities

Hone Shee Group (鴻禧集團), a Taiwanese property developer that operates the Lai Lai Sheraton Hotel, said it plans to sell NT$30 billion (US$871 million) of asset-backed securities to pay debt and the salaries of its employees.

The company is targeting institutional investors such as Lehman Brothers Holdings Inc. for the sale, which will be backed by its Hsiu-Kang Country Chateau residential development.

It will use the proceeds to repay NT$20 billion of bank loans and NT$80 million of salaries to hotel workers. It will set aside NT$250 million to cover disputed rent to Cathay Life Insurance Co (國泰人壽), Ou Kun-shan (歐崑山), vice president of Hone Shee Development (鴻禧開發) said.

Hone Shee and its rivals are struggling in the face of a decade-long slump in the property market that may become worse as the island's economy heads for its first full-year recession.

Exports, the largest component of the economy, are forecast to shrink 17 percent this year.

"Property companies across the board are suffering because of the slowing economy," Ou said. ``We hope the government implements measures to revive industry.''

Sun Splendor Co (三采建設), a property leasing and development company, yesterday applied for court protection after NT$630 million of checks it gave bounced, spokesman Tsai Bin-hui said.

Hone Shee owes two months of salary to more than 1,000 Lai Lai Sheraton Hotel workers. It has missed rental payments since June to Cathay Life, which owns the hotel property. Hone Shee has spent more than NT$400 million on repair works it claims that Cathay should pay, Ou said.

Cathay has filed a claim with a Taipei court to force Hone Shee to pay, company spokesman Wu Chung-yi said.

Taiwan Cooperative Bank (合作金庫) is the largest creditor of Hone Shee, which has also borrowed from others including Chinatrust Commercial Bank (中國信託商銀), Ou said.