Asia Satellite Telecommunications Company (AsiaSat) has signed a five year, $250 million syndicated loan facility with 19 Hong Kong and international financial institutions. HSBC Investment Bank Asia is the sole coordinating arranger of the facility. Lead arrangers include HSBC, Hang Seng Bank, Bayerische Landesbank Girozentrale, Bayerische Hypo- und Vereinsbank, Commerz (East Asia) Ltd, CITIC Ka Wah Bank, NBI Capital Bank and Credit Lyonnais.
The interest margin of the facility is 125 basis points over Libor, and will be drawn down within two years with a three year repayment schedule. Once fully drawn, the debt to equity ratio of the company will be 1:2. The guarantor of the loan is AsiaSat's parent company, Asia Satellite Telecommunications Holdings Limited.
"It was the cheapest capital available," says Peter Jackson, CEO of AsiaSat, when questioned why a syndicated loan was used as a financing method. The amount of security that AsiaSat had to offer dictated the loan amount, he added.
The loan facility will be used to finance the capital expenditure required for AsiaSat's two new satellites, AsiaSat 4 and AsiaSat 5. AsiaSat 4, scheduled for launch in the first half of 2002, is estimated to cost $220 million, and AsiaSat 5, which is still in the design stage is expected to cost between $220 million and $300 million. The shortfall between the $250 million loan facility and the total cost of both satellites will be made up by the company's internal cash flow, says Jackson. Accordingly, the company says it will not be looking for further funding for the two satellite projects within the next five years.
AsiaSat 4 has not yet leased any of its capacity, but Jackson expects opportunities to emerge in direct broadcast satellite (DBS) services. The satellite carries 28 C-band and 20 Ku-band transponders with an operational life of 15 years. Plans for AsiaSat 5 have begun although the final design and manufacturer of the satellite is yet to be determined.
AsiaSat is actively looking for joint venture partners in areas that could exploit the potential of satellite-based services. This could include content, web streaming and direct to home service partners, in other words, anything that could use the broad geographical reach of the satellite and point to multiple point usage. One joint venture already in the works is PhoenixNet. AsiaSat owns 37% of the venture, which is set to offer broadband internet access, multimedia distribution and corporate broadcasting. Other shareholders include Yahoo! and Tech System.
