Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (1036)	4/10/2001 3:45:44 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

WRAP: Singapore Telecom Plans A$3B Loan For Optus Bid Updated: Monday, April 9, 2001 04:47 AM ET By Adam Bradbery and Graham Morgan of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Singapore Telecommunications Ltd. (P.GST, news, msgs) is negotiating a A$3 billion loan to help fund its takeover bid for Australian telecommunications company Cable & Wireless Optus Ltd. (A.CWO, news, msgs), according to a person familiar with the transaction. The loan deal is in its early stages but is expected to be finalized over the next two months so that financing is available when the Optus bid is completed. Four banks are believed to have been appointed as arrangers for the transaction including Deutsche Bank, Salomon Smith Barney, BNP Paribas and Singapore's DBS Bank. The banks and SingTel declined to comment on the loan. "The timing of the loan inquiry suits the timetable of the Optus bid," said a Sydney-based telecoms analyst who asked not to be identified. Optus told its shareholders Monday they don't have to take any immediate action in relation to the SingTel bid, and could be waiting up to eight weeks for the bid document and official response from Optus to arrive in their mailboxes. SingTel's bid for Optus, which is 52.5%-owned by Britain's Cable & Wireless PLC (CWP, news, msgs), values the Australian company at up to A$17.2 billion based on SingTel's closing price of S$2.42 a share March 23. Shares in both companies have fallen since the bid was announced. Shares in Optus closed eight cents, or 2.1% weaker, at A$3.65 Monday, while the S&P/ASX 200 index fell 0.5%. The bid gives Optus shareholders three alternatives to offload their shares, including a straight SingTel share swap, a SingTel share swap plus cash, and a SingTel share, cash and bond offering. The loan structure is aimed at providing cash for the latter two options and is believed to be a syndicated structure which will provide bridging finance ahead of eventual refinancing in the bond market, said one person. Pricing Expected Attractive For SingTel One fixed income analyst said it is likely that SingTel will be able to achieve a "fairly attractive" pricing on the loan issue. He said a number of banks are expected to be keen to establish a relationship with SingTel for future debt market issuance. "I'm sure people will be happy to lend SingTel the money because at the start of the year SingTel was debt free, an unusual position for any telecommunications company," the telecom analyst said. It is expected that at least part of the loan will be refinanced at a later date through the domestic corporate bond market and possibly overseas bond markets as well if supply becomes a problem, say fixed income analysts. While SingTel is currently unrated, it has said that it is committed to obtaining a rating within six months of the Optus bid being completed. This would also determine the rating of the entity which holds the Optus assets and which would be the likely holder of the debt issues. SingTel president and chief executive Lee Hsien Yang said he believes the company could be rated between A+ and AA. "Once it has a rating, capital markets opportunities really open up to it," said one analyst. The loan is expected to have a maturity of between one and two years, possibly split into different tranches which would allow staggered refinancing into the bond market and more manageable chunks of debt. Trying to force large chunks of debt into the bond market risks pushing out the spreads on Optus' existing bond issues and turning investors sour on the new issuer. Optus has an A$200 million bond due November 2002 and an A$300 million issue due July 2005 as well as euro and U.S. dollar issues. Cable & Wireless Will Take Bonds Optus chairman Ralph Robins said in a statement to the Australian Stock Exchange Monday that the formal offer document from SingTel and the response document from Optus will be sent to Optus shareholders in around eight weeks. The document from Optus will include the recommendation of an independent report by Grant Samuel & Associates on the fairness and the reasonableness of the offer. The bid is conditional on receiving more than 50% acceptances and approval of Australia' Foreign Investment Review Board. Cable & Wireless has already accepted for its 19.9% Optus stake, choosing the third shareholder option that includes shares, cash and bonds. The maximum value of bonds issued would be A$2 billion. Analysts believe other minority shareholders in Optus will take the second option, a mixture of SingTel shares and cash. Separately, SingTel President and Chief Executive Lee Hsien said he is willing to work with Optus' bigger domestic rival Telstra Corp. (TLS, news, msgs) on future telecom projects in Asia. While SingTel will compete "very seriously" with Telstra if its offer for Optus is successful, "that doesn't mean that in other instances, if it makes sense, we might not collaborate on other projects," Lee told the Business Sunday program on the Nine television network. This comment raised some eyebrows in Australian financial circles as both companies have expressed interest in buying Singapore's second-ranked mobile phone company MobileOne. Telstra already has a pan-Asian alliance with Richard Li's Pacific Century Cyberworks Ltd. (H.PCW, news, msgs). -By Adam Bradbery, Dow Jones Newswires; 61-2-8235-2955; adam.bradbery@dowjones.com -By Graham Morgan, Dow Jones Newswires; 61-2-8235-2962; graham.morgan@dowjones.com quicken.com