General syndication was launched last week for the American International Credit Card NT$8 billion ($238 million) facility. HSBC, BNP Paribas, Bank of Taiwan and Chang Hwa Commercial Bank are the mandated arrangers for the deal. Hua Nan Commercial Bank was invited to join on the top level as coordinating arranger, while Credit Lyonnais (Taiwan) has joined as an arranger. Signing of the loan is scheduled for the first week of August.
The facility comprises of a NT$4.5 billion loan and a NT$3.5 billion note issuance guarantee facility. The loan pays a spread of 82.5bp over the secondary CP fixing rate. The six-month secondary CP fixing rate as of last week was 1.994%. Banks joining in the syndication of the note issuance facility will act as guarantors for the notes and will receive 82.5bp as fees. The borrower has the option to extend the deal by one year after the third year. Extension fees will amount to 15bp.
The deal pays 18bp flat participation fees for arrangers committing NT$600 million or above, with an all-in of 88.5bp. Co-arrangers with commitments of NT$450 million-NT$600 million receive 12bp flat participation fees (all-in of 86.5), while senior managers receive 9bp flat participation fees for commitments of NT$300 million-NT$450 million.
Proceeds from the present borrowing will be utilized for the refinancing of an NT$6.3 billion L/C facility in November 1999. The borrower's 100% parent, American International Group Inc. (AIG), guaranteed NT$500 million on that deal, which paid a commission of 100bp and saw participation from 16 banks.
The pricing of the current borrowing is said to be attractive. AIG Credit Card Company, Hong Kong tapped a HK$3.5 billion three-year facility at a spread of 65bp over Hibor in August last year. The facility comprised a HK$2.1 billion term loan and HK$1.4 billion revolver.
The terms of the present borrowing include an ownership covenant whereby AIG will directly or indirectly maintain at least a 51% stake in the borrower during the term of the facility. The borrower has to maintain a minimum equity ratio of 8%. The equity ratio is calculated as the aggregate of total tangible net worth plus subordinated debt provided by AIG divided by the aggregate of total assets plus contingent liabilities.
