Mandated arrangers Korea Development Bank, Societe Generale and Bayerische Landesbank launched a $100 million three-year transferable term loan facility for Samsung Hong Kong into general syndication last week. Syndication is slated for close on September 19, while signing is scheduled for September 30. Samsung Corporation is the guarantor for the bullet deal.
The deal, paying a margin of 75bp over Libor, is being marketed on three levels. Banks joining as co-arrangers on the top level with commitments of $10 million or above receive management fees of 45bp (all-in of 90bp), while senior managers committing between $7-$9 million receive management fees of 39bp (all-in of 88bp). On the lowest level of managers, banks receive management fees of 33bp (all-in of 86bp) for commitments of $3-$6 million.
Proceeds from the facility will be used for general working capital including repayment of existing debt. Observers believe that Samsung Hong Kong will utilize the proceeds to repay fully the term loan it tapped in April 2001. According to figures provided by Dealogic, Samsung Hong Kong raised $100 million through a three-year loan in April 2001 at a margin of 160bp over Libor. That facility, however, included a put option, which if not exercised within two years, would have resulted in a step-up in margin to 180bp in the third year.
By borrowing now at more than half of what it paid last year, Samsung Hong Kong is tapping lower cost funding to retire high cost debt. It would not come as a surprise if the borrower upsizes the deal, should it meet with good demand during general syndication. That the deal, mainly targeted at European and Korean banks, was directly launched into general syndication is a measure of the confidence of the arranging banks that the deal will meet with success, underpinned by the guarantor's credentials and the small size of the deal.