Swire Pacific Limited
(Incorporated in Hong Kong with limited liability)
Swire Pacific Limited ("the Company") announces that its wholly owned subsidiary, Swire Properties Limited ("SPL"), has recently received from the HKSAR Government Lands Department quantified details of a claim against SPL and certain wholly owned subsidiaries of SPL for payment of land premium and interest principally in relation to the Cityplaza Four, Cityplaza Three and Cityplaza One office towers, completed, respectively, in 1991, 1992 and 1997.
The Company wishes to make clear that no premium has ever been demanded in respect of these properties and, having taken separate legal advice from three leading counsel, the Directors consider that the claim is ill-founded and do not accept that SPL is liable to pay any premium. The HKSAR Government Lands Department and SPL have agreed that this matter will be settled by arbitration.
In the unlikely event that SPL is found to have a liability for premium, then the basis of calculation of the premium for each property will also need to be resolved, as will the dates by reference to which the premium is assessed and the question of interest, if any. The potential liability could therefore vary considerably, from a minimum of zero as maintained by SPL, to a maximum of approximately HK$4,500 million if Government were to succeed in each and every aspect of its claim.
The claim is purely monetary since it has been agreed by Government that it will not as a result of the subject matter of the claim exercise any right or apply for any remedy or relief for or with a view to any of the following: termination of the Government leases relating to the development, re-entry to the relevant sites, or mandatory orders requiring the modification or demolition of any structure.
If any payment is awarded in the arbitration, it would be substantially offset against the Company's consolidated property valuation reserve and not against the consolidated profit and loss account.
No further announcement will be made until the final outcome of the arbitration is known which is expected within the next twelve months.
By Order of the Board
P A Moore
Hong Kong, 14 January, 2000
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