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Hong Kong Disneyland

Project Finance
Group 6
The Project : Disneyland Hong Kong
Disneyland Hong Kong is a Theme Park and Resort located in
the north-eastern end of Lantau island
Project to be developed in 3 phases
Sponsor : Hong Kong International Theme Parks Limited
Timelines of Project:
Land reclamation and Infrastructure development ( 2000-2002)
Park construction (2003 2005)
Park opens for business (2006)
Sources of Cash
Sources of Finance HKD mn % share Remarks
Debt
Bank Term Loan 2,275 16.2 % Syndicate Loan towards
project construction
HK Government Loan 6,092 43.3 % 25 year final maturity
with repayment starting
in 2016
Sub total 8.367 59.5 %
Equity
HK Government 3,250 23.1 % Represents 57 % of total
equity
Walt Disney 2,449 17.4 % Represents 43 % of total
equity
Sub total 5,699 40.5 %
Total 14,066 100 %
1. Cost of land reclamation and infrastructure development to be
contributed by HK Govt. in exchange for non participating ,
convertible stock
2. An additional non recourse revolving credit facility of HKD 1
Billion will be arranged for working capital requirement
Term Sheet
Loan Amount : 3.3 Bn HKD
Loan Tenure : 15 years
Repayments will start 3 years after opening
No subordination of management fees and royalties
Syndication would follow sub underwriting approach
Final bank group to be manageable
Bid to Win or Lose?

Longer
than
comfortabl
Chase e tenure
would Sponsors
propose
maximum
flexibility

Reaso
If sponsor ns for
accepted Reaso Bid to
Chase as
the sole ns for Government
support for
Lose
lead
arranger Bid to project
(underwrite
r)
win
Sponsors
insistence
on three
lead
arrangers
Tightening (underwrite
spreads of rs)
syndicated
loans
Pricing Proposal
Step Up Pricing:
Yr 1 to Yr 6: HIBOR + 100 bp
Yr 7 to Yr 11: HIBOR + 125 bp
Yr 11 to Yr 15: HIBOR + 137.5 bp
Fees: 100 150 bp (assume 125 bp)
Full Underwriting
Revolving Credit Facility Split creative feature
HK $250 Million immediately at 37.5 bp p.a
HK $750 Million after Construction completed at 15 bp p.a
Market Flex Clause
Strategy 1
No. of Initial u/w Sub underwriting General Syndication
Banks amount (in mn HKD) (in mn HKD)
(in mn
HKD) Initial sub u/w Total Individual Total % of total
amount Commitme Allocation Amount
nt

Coordinating Arranger (MLA) 1 3,300 660 660 300 300 9.1


Lead Arranger (Sub u/w) 4 660 2640 300 1200 36.4
Lead Manager 2 100 200 6.1
Total 15 3,300 3,300 3,300 100

Pros
Chase would be sole MLA
Administrative Simplicity
Small Syndicate with only 15 participants
Reduced underwriting exposure for Chase
Cons
Lengthy Process involving Sub-Underwriting & General Syndication
No. of
Strategy 2
Initial u/w General Syndication
Banks amount (in mn HKD)
(in mn
HKD) Individual Total % of total
Allocation Amount

Coordinating Arranger (MLA) 3 3,300 300 900 27.27

Lead Arranger (Sub u/w) 0

Arranger 4 250 1000 30.3

Co-Arranger 6 150 900 27.27

Lead Manager 5 100 500 15.15

Total 18 3,300 3,300 100

Pros
Skip the under-writing phase

Cons
Sharing of league status
Giving up 2/3 of under-writing fees
Strategy 3
No. of Initial u/w General Syndication
Banks amount (in mn HKD)
(in mn
HKD) Individual Total % of total
Allocation Amount

Coordinating Arranger (MLA) 1 3,300 300 300 9.1

Lead Arranger (Sub u/w) 0

Arranger 4 250 1000 30.3

Co-Arranger 8 150 1200 36.36

Lead Manager 8 100 800 24.24

Total 21 3,300 3,300 100

Pros
Chase would be sole MLA
Proceed directly to general syndication
Improve Chases compensation and league table status
Cons
High credit and syndication risk
Large syndicate size with 21 participants
Thank You

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