New World ends airport mall agreement, shares fall

** Shares of New World Development 0017.HK reverse early gains to lose nearly 7%

** They jumped as much as 10.7% to HK$6.7, their highest level since September 7, in early trading

** The property developer said on Wednesday its cash crunch had eased further after expanding a loan facility by around HK$1 billion ($127.5 million) and terminating operating rights for a shopping mall next to the Hong Kong airport.

** As part of the early termination agreement, Chow Tai Fook Enterprises, the controlling shareholder holding 45% in New World, granted the Hong Kong Airport Authority an option to acquire around 30% of New World's shares from itself within three years, given CTFE remains the largest shareholder

** J.P.Morgan says this could imply CTFE might carry out a rights issuance or capital injection

** The brokerage says "most of the negatives are behind us" for New World after the termination, as it released the company's obligation to pay the HKAA a HK$1.8 billion guaranteed annual rent for 40 years

** UBS says the option to HKAA signals possibility of equity issuance to CTFE or rights issue within the next three years; adds that if HKAA would become New World's second largest shareholder, it could enhance the developer's credit profile

** YTD, stock down 20%, benchmark Hang Seng Index .HSI down 6.5%