Hong Kong Disneyland managing director Andrew Kam Min-ho said last week the government does not need to inject more money into the project, assuring that it would remain the major shareholder. But a source said Disney is now negotiating with the government to convert part of the loan as its share of capital expenditure.

The Walt Disney Company has said it will inject about HK$3.5 billion to expand the park area by 67 percent.

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But the source told The Standard's sister newspaper, Sing Tao Daily, that if the government foregoes part of the loan as shares, it would be in effect financing the expansion.

The source said the government will need to study the proposal very carefully as it involves a change of conditions.

During negotiations for the initial construction of the park, the government and Walt Disney agreed the cost of HK$14.1 billion should be financed by a mixture of debt (HK$8.4 billion) and equity (HK$5.7 billion).

The debt was raised by a commercial loan of HK$2.3 billion and a government loan of HK$6.1 billion payable over 25 years from the park's opening in 2005.

In September, Walt Disney loaned HK$3.26 billion to the joint venture that owns HKDL to repay the commercial loan.

The current round of negotiations between the government and Disney revolves around the HK$6.1 government loan.

Disney and the government respectively invested HK$2.45 billion and HK$3.25 billion into the construction, holding 43 percent and 57 percent of the shares respectively.

Last week, Kam said the Disney expansion plan will only cut a small portion of the government's shares.

He mentioned new rides, including thrilling ones geared toward young adults as well as something uniquely Hong Kong. He said the scale of the expansion project is so great that it would become the "11th major infrastructure" and will create several thousand jobs.

If the proposal is approved, it will only take two to three months for work to begin and about two to three years to complete.

Walt Disney Parks and Resorts Asia president and managing director Bill Ernest also said last week the government and TWDC are negotiating on some complex issues, but he hopes a deal can be reached in the coming year.