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Technology Stocks : Pacific Century CyberWorks (PCW, PCWKF) -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (732)	3/19/2000 11:41:00 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 4541

Li launches record loan By a staff reporter STORY: THE record-breaking US$12 billion (HK$93.6 billion) loan for Pacific Century CyberWorks (PCCW) has been launched and is expected to be popular with banks, but its sheer size may put pressure on borrowing costs in Hong Kong, Asian debt market newsletter Basis Point reported. The newsletter said the arrangers of the syndication do not expect any problems finding takers despite its size. Basis Point reported that the $12 billion loan, which is to help fund PCCW's acquisition of Cable & Wireless HKT (HKT), was launched on Friday by co-ordinating arrangers BOCI Capital, HSBC Investment Bank Asia, BNP Hong Kong and Barclays Capital. It is the largest loan in Asian history, and more than twice as large as the previous record-holder _ Citibank's $5 billion loan for Japan Tobacco in 1999. ``As a result, banks are considering its general effect on (the loan) market. Some say the deal will tie up so much of Hong Kong's country limit that Hong Kong spreads will have to increase substantially, putting a welcome brake on rapidly declining yields,' it said. ``Another effect could be to boost secondary loan trading in Hong Kong,' it said, noting that the deal is in the form of transferable loan certificates (TLCs). It said the underwriting fee was 35 basis points. Including the 70 basis point front-end fee and and 115 basis-point margin, the all-in yield is 220 basis points for 364 days. The loan is being arranged in two tranches: one of $3 billion tranche and the other $9 billion. Despite PCCW's relative youthfulness _ in its current incarnation the company is not even a year old _ bankers are expected to swamp the deal. The co-ordinating arrangers have already invited 30 banks, covering North America, Asia-Pacific and Europe, to join the deal. ``Banks are enthusiastic because the deal is large, well-secured, non-property and offers good prospects for future business,' the newsletter said. ``Some feel that the larger the underwriting amount, the greater the chance of winning subsequent mandates, and that the co-ordinating arrangers will not automatically receive the mandate for the term financing,' it added. The newsletter said the loan offers banks the chance to book unprecedented levels of fees. ``Even if banks committing $1 billion are scaled back to $500 million, each bank would earn $1.75 million for underwriting plus a front-end fee of $3.5 million. Half of the fees will be paid within seven days of signing, with the rest paid when PCCW's offer for HKT becomes unconditional. If the acquisition does not proceed, banks will be released from their obligations and keep their fees, the newsletter said. It suspected the loan may not be syndicated more widely because more than 10 banks are expected to offer to underwrite US$1 billion. ``However, some banks are still likely to ask the co-ordinating arrangers to reconsider _ especially since some of the co-ordinating arrangers may also wish to sell down more _ but any chance of a change in syndication strategy is remote,' the newsletter said. It noted that the recent 30 billion euro (HK$225.38 billion) financing for Vodafone AirTouch Mannesmann was wrapped up at the sub-underwriting level without syndication. The borrowing is being made through a special purpose company, Doncaster Group, a Hong Kong-incorporated special-purpose company with unconditional and irrevocable guarantees from its direct parent, Atherington Management, which is a British Virgin Islands company, and from PCCW. The newsletter said lenders had security in the form of a debenture incorporating a fixed and floating charge over the assets and undertakings of the borrower and a first legal mortgage over all shares and dividends from shares acquired in HKT. The newsletter said the loan could be extended at the borrower's option by one year online.hkstandard.com