Haitai, which has 20% of the Korean confectionery market, was recently auctioned to a consortium that includes CVC, JPMorgan Capital Partners and UBS Capital.
JPMorgan was mandated to raise the acquisition debt finance for the deal and has come up with a W345 billion senior secured facility which is expected to see eager participation from banks around the region.
It has brought in Chohung Bank as joint lead and co-underwriter and has structured the deal in three tranches – two of which can be subscribed to in US dollars or Korean won, and one which is available only in the latter.
The first tranche is a W185 billion five-year amortizing term loan; the second is a W85 billion 7-year loan; and the third is a W75 billion five-year bullet revolving credit facility.
Pricing is complicated by whether the banks opt to commit funds in US dollars or Korean won. Thus on the first tranche, the Korean won pricing is 275bp over the won CD rate, and 300bp over libor; on the second it is respectively 350bp over and 375bp; and the third is only available in won and is 300bp over.
Pricing will also be tied to a security grid and there will be an undrawn commitment fee of 75bp.
Banks can join at two levels. At the lead arranger level they will have to take W65 billion and will receive an underwriting fee of 35bp and 80bp participation fee; and at the arranger level, the all-in fees will be 10bp less.
The deal will be syndicated using an Internet based process, and a secure website. JPMorgan expects to form a group of around 15 banks.
Given the ever tightening pricing we have been seeing in the syndicated loan markets, the pricing on this deal looks likely to attract a great deal of interest. Five-year deals for Hong Kong corporations are hitting the market at levels between 40-50bp over Libor. Haitai, meanwhile, is reckoned to be on the cusp of investment grade, and over subscription on this deal looks assured thanks to the liquidity in the Korean banking sector and the interest among international banks to put on assets that have some real yield.
