A top Hong Kong government official is pleased with the progress in talks with the Walt Disney Co on expanding the underperforming Hong Kong Disneyland, and a deal could be reached soon, his spokesman said on Saturday.

Hong Kong Financial Secretary John Tsang met with Disney executives including theme parks Chairman Jay Rasulo and parks Chief Financial Officer Jim Hunt on Friday in Los Angeles.

Disney and Hong Kong, which are partners in the park, have held protracted talks over financing for a second phase of construction, which could cost a reported HK$3 billion ($387 million).

"We had very good discussions with the Disney management ... yesterday. We are happy with the progress achieved at the negotiations regarding Hong Kong Disneyland's expansion plans," spokesman Patrick Wong said in an email.

"There are still a number of issues to be sorted out but we hope that an agreement could be reached quite soon."

Disney was "encouraged by the recent discussions with our partners regarding the expansion of Hong Kong Disneyland and are optimistic we will be able to finalize a deal to move forward on exciting new plans for the park," Disney spokeswoman Tasia Filippatos said on Saturday.

In Hong Kong, officials said the talks had broken fresh ground and details on Disney's expansion would be announced soon.

"According to my understanding, on a number of important and significant points, everyone is beginning to have little breakthroughs," said Rita Lau, Hong Kong's Secretary for Commerce and Economic Development, in a statement.

The meeting comes weeks after Disney said it had suspended expansion plans and disbanded the group of designers working on adding attractions to the 310-acre (125-hectare) park that opened in 2005.

Critics say it is too small to attract the repeat visits that have made Disney's other parks profitable.

Attendance has failed to reach initial bullish projections, despite the park's proximity to Chinese mainland, and the Chinese tourist market has since been hit by the economic crisis.

Disney, meanwhile, has signed a framework agreement with authorities in Shanghai to build a park there.

(Reuters May 4, 2009)