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Sara French

Sogo Hong Kong has denied reports from Tokyo that its Japanese parent, which collapsed on July 12, plans to sell the Causeway Bay department store and the rest of its overseas operations.

Deutsche Presse-Agentur yesterday quoted a Tokyo-based Sogo official as saying the Osaka-based department-store operator would sell all its overseas stores and real estate to local companies.

'I have not heard that,' assistant managing director Charles Lam Kwong-wui said.

'We have not received any such instruction from Japan or anywhere else.'

Sogo has 14 stores in Europe and Asia. It operates in Hong Kong, Malaysia, Taiwan and Thailand.

There have been several reports in recent weeks that its local unit was looking to sell the building in which the Causeway Bay store is housed. 'We have known for two or three weeks that it is up for grabs,' said Andrew Taylor, a property analyst at ABN Amro Asia, yesterday.

'It is being sold, from what I can gather, on a two-party negotiated basis rather than through any sort of public auction or tender.'

Among the most likely bidders is Hang Lung Development.

Together with its Amoy Properties unit, the company owns several retail properties in Causeway Bay, including some formerly occupied by Japanese department stores.

Alfred Li Hung-kwan, Hang Lung's executive director, did not return a call seeking comment.

Mr Taylor said the store could remain in operation even if the building was sold.

'So much of its operation as a department store is franchised out to the brand names that it would not be terribly difficult to take on their business,' he said.  'The underlying retailers are third parties to Sogo . . . so most of the occupancy of the store would continue.'

Nihon Keizai Shimbun on Saturday reported, without citing sources, that Sogo might form an alliance with Seibu Department Store and sell its Beverly Hills shopping mall to raise cash.

Sogo yesterday issued a press release dismissing the report as speculation.

But Bloomberg yesterday quoted Sogo official Hirano Morita as saying that an alliance with Seibu 'could happen' and confirming that the company was in talks to sell its Rodeo Drive mall.

The Financial Times reported, without citing sources, that Sogo would, during the next two weeks, sell the Beverly Hills property to a private European family trust for US$130 million.

Sogo bought the property for an estimated US$225 million in 1990. Sogo already has ties to Seibu, a closely held member of the Saison Group, and hired former Seibu chairman Shigeaki Wada as an adviser. Dickson Poon, chairman of Dickson Concepts International, which owns Hong Kong's Seibu stores, did not return a call seeking comment.

Sogo was the most active stock on the Tokyo Stock Exchange yesterday, with more than 14.5 million shares changing hands.

It closed down one yen at nine yen after rising to a seven-day high of 12 yen in early trading.



Rumours put bankrupt parent of Japanese retail chain in merger bid with Seibu and selling off foreign operations