Li Ka-shing-controlled Cheung Kong Property has scaled back its jumbo loan from HK$55 billion ($7.1billion) to HK$40 billion ($5.2 billion), according to two sources familiar with the matter.
Speculation is that Bank of America Merrill Lynch and HSBC have been assigned the outstanding amount in deference to their role as co-underwriters of an earlier bridge loan, according to one of the sources.
Cheung Kong Property is taking the HK$40 billion loan to repay the bridge loan it used to buy up CK Hutchison Holdings’s development and rental property and hotels. Following the acquisition of those properties CK Property will hold all the property assets of the group.
A total of 28 lenders had joined in the loan, namely ANZ, Bank of America Merrill Lynch, Barclays, BNP Paribas, BOC, BTMU, Credit Agricole, China Construction Bank, Citi, Deutsche Bank, DBS, Goldman Sachs, Hang Seng, HSBC, ING, JP Morgan, Lloyds, Mizuho, Natixis, National Bank of Abu Dhabi, OCBC, Intesa Sanpaolo, Santander, Standard Chartered, Scotiabank, SMBC, UOB and Westpac.
However, lenders have since been informed that the size of the loan has been cut to HK$40 billion, and that that amount is to be split equally among them.
Despite the cutback, lenders remain philosophical and keen to take whatever allocation they can get to foster their relationship with the group. "It's a little disappointing, but still good for our relationship with them," according to one of the sources.
Li, Hong Kong's richest man, has been a major source of fees, according to Dealogic. Li-controlled companies have generated a total of $1.1 billion of investment banking fees since 2000, the data provider said.
The three-year bullet offered a pricing of 110 basis points over Libor all-in and the cutback reflects the amount of liquidity chasing loans for blue chip clients in Asia.
Noble group bags one
Commodities trader Noble Group, founded by British businessman Richard Elman, has seen its first $95 million commitment from ING as syndication on its $2.25 billion dual tranche loan progresses. The deal comprised a $1.35 billion three-year loan and a $900 million one-year loan.
A group of 15 banks earlier this month launched syndication on the $2.25 billion revolving loan facility. The banks were ANZ, Bank of America Merrill Lynch, Bank of Tokyo Mitsubishi, Citi, Commonwealth Bank of Australia, Rabobank, DBS, Goldman Sachs, HSBC, Intesa Sanpaolo, JP Morgan, National Bank of Abu Dhabi, Societe Generale, Standard Chartered Bank and United Overseas Bank.
Noble received $1.5 billion in commitments from the 15 lenders and adding on ING's latest commitment, it needs to raise about $655 million more.
"The vast majority has been anchored," said one lender familiar with the matter. "Banks have gotten approval to take and hold the loan and are building the book up to $2.25 billion," he added.
The market is watching the syndication process closely as short-seller Muddy Waters earlier this month put out a scathing report on the group, accusing it of “existing solely to borrow and burn cash.” The report also questioned Noble group's debt levels and its ability to generate cash.
Noble Group, which has former Goldman Sach banker Yusef Alireza at the helm as CEO, has since fought the allegations and said it rejects the assertion that Noble exists to borrow and burn cash.
