Li Ka-shing-controlled Cheung Kong Property has priced its jumbo HK$55 billion ($7.1 billion) loan at 110 basis points over Libor all-in, according to two sources familiar with the matter.
The new loan is coming slightly under what was guided by the company, as it had previously capped all-in pricing at Libor plus 115bp.
Term sheets for the three-year bullet loan have been sent to the banks and they can choose to lend in either US dollars or Hong Kong dollars, with Hibor being the benchmark if they lend in Hong Kong dollars, one of the sources said.
The pricing requires commitments of HK$5 billion or more. CK Property had initially looked at smaller ticket requirements of HK$2.5 billion to HK$5 billion but scrapped that due to the large orders that were placed and the keen interest shown by lenders, according to both of the sources familiar with the deal.
So far, CK Property has attracted at least HK$100 billion ($12.1 billion) in commitments from lenders. The loan pays a margin of 95bp over Libor per year and a one-off upfront fee of 45bp. The commitment fee is 25% of the interest margin.
Thanks to CK Property's blue-chip parentage it easily overcome the market's nagging Chinese real estate concerns. Over 20 banks expressed interest, including DBS, HSBC, ANZ, Scotiabank, Bank of America Merrill Lynch, BNP Paribas and the three Japanese lenders -- Mizuho, SMBC, and BTMU.
Commitments are due at the end of the month.
Reorganisation, proforma numbers
CK Property, a company born from the reorganisation of Cheung Kong Holdings and Hutchison Whampoa, wants the funds to help repay the bridge loan used to buy up CK Hutchison Holdings’s development and rental property and hotels. HSBC and Bank of America Merrill Lynch provided the bridge loan.
Cheung Kong Holdings and Hutchison Whampoa are being restructured into two new companies: CK Property, which will hold all the property assets, and CKH Holdings, a diversified conglomerate with interests ranging from telecoms to ports and infrastructure.
That reorganisation was completed on Wednesday when CKH Holdings's shares began trading to end the day at HK$151.5. Cheung Kong Holdings's shares have ceased to trade.
CK Property, which which will hold all the property assets will be listed via a spin-off listing and each CKH Holdings shareholder will get one CK Property share.
According to a filing with the Hong Kong Stock Exchange, CK Property’s proforma revenue for 2014 was HK$46.6 billion ($5.6 billion) while its profit was HK$54 billion ($6.6 billion), boosted by a HK$33.7 billion increase in the fair value of its investment properties.
The group has total net assets of HK$226.6 billion in 2014.
