At last the hotly contested loan deal for CRE Finance (Hong Kong) was launched into general syndication yesterday. Bank of China, Bayerische Landesbank, BNP Paribas, Credit Lyonnais, HSBC, Hang Seng Bank, Industrial and Commercial Bank of China and Standard Chartered are the mandated arrangers for the dual tranche HK$3 billion loan deal, which was launched directly into general syndication.
Bank of China, Credit Lyonnais, HSBC and Standard Chartered are the bookrunners for the deal, which features a bullet repayment. Bayerische Landesbank is the documentation agent, while HSBC is the facility agent. General syndication closes on October 8 with signing scheduled for mid-October.
The deal comprises of two tranches - a term loan (Tranche A) and a revolving credit facility (Tranche B) - of HK$1.5 billion each. The facility will be available in Hong Kong and US dollars. Both the tranches have a tenor of five years. The deal is guaranteed by China Resources Enterprise, the borrower's parent, which is listed in Hong Kong and London. China Resources Enterprises is involved in a variety of businesses such as retail, food and beverage, textile, petroleum and chemical distribution and property.
The transaction pays a margin of 39bp over Hibor and is being marketed on three levels. On the top level, co-arrangers committing $150 million or above receive management fees of 37.5bp (all-in of 46.5bp). Lead managers joining the transaction with commitments of $100-$140 million receive management fees of 32.5bp (all-in of 45.5bp), while senior managers committing $30-$90 million receive 27.5bp (all-in of 44.5bp).
The present transaction has the same structure as the five-year HK$2.9 billion loan tapped by CRE Finance in June 2000. Proceeds from the deal will go toward general corporate funding requirements for the parent as well as its associate companies. The proceeds will also go toward refinancing of existing indebtedness and it is widely believed that CRE Finance is taking advantage of the low interest rate regime to retire higher cost borrowings.
Pricing on the current deal is almost half of the 68bp over Hibor that CRE Finance paid in June 2000. In that context the proceeds of the current transaction would very well go toward repaying the loan tapped in June 2000. According to figures provided by Dealogic, CRE Finance's previous visit to the loan markets was in March 1997, when it borrowed $175 million through a five-year loan-style FRN at a spread of 62bp over Libor.
