Central Waterfront Property Development has closed a HK$7 billion ($897 million) syndicated term loan that will finance the construction of a massive new tower block on Hong Kong island. The borrower is a consortium made of leading Hong Kong companies. Its shareholders are Sun Hung Kai Properties (SHKP) (which owns 47.5%), Henderson Land development ( which owns 32.5%), Hong Kong and China Gas (which owns 15%) and Bank of China Group Investment (which owns 5%)
The loan will be used for the construction of the International Finance Centre (IFC) Tower 2. IFC 2 is being built on reclaimed land next to Hong Kong station and is set to be the tallest building in the world when it is completed. It will be twice as high as the neighbouring IFC Tower 1 and will have more than 80 stories.
The HK$7 billion loan has a six year maturity with an amortizing repayment schedule giving it an average life of five and a half years. Draw down of the facility will begin this year with the bulk of the funds being drawn down in 2001.
The loan has been fully syndicated to a group of 32 local and international banks. There were five coordinating arrangers: BOCI Capital, ABN Amro, Citicorp International, National Australia Bank and Sumitomo Bank. The wide geographic spread of the arranging banks is reflected in a very wide syndication of the facility.
Bankers were pleasantly surprised by the strong take up of the loan. What with the refinancing of PCCW and the forthcoming Disney loans, some loan officers feared that there would not be enough demand for the Central Waterfront deal. Moreover, both SHKP and Henderson Land have borrowed substantial amounts this year from the local loan market. In March, SHKP signed a HK$7 billion, five year loan. Also in March, Henderson signed a HK$5 billion, three year deal.
However, such is the liquidity of the local loan market in Hong Kong that this new facility was easily syndicated. The loan carries a margin of 59 basis points over Hibor. The lenders have full recourse to the consortium's shareholders through guarantees issued by all the shareholders. The guarantees were said to be a big fillip to the deal.