STRUCTURING LOAN SYNDICATES A CASE STUDY OF THE HONG KONG DISNEYLAND PROJECT LOAN
In this scenario, there are four other banks with Lead Arranger titles with approved sub-underwriting commitments see below. Sahlman, Aspects of Financial Contracting in. Published on Jul View Download Relationship considerations, while not the onlyconsideration, are the most important considerationsin deciding on a syndication strategy. Nevertheless, there are aspects of the dealthat appear less favorable. At the same time, Lowe had to decide whether to raise subscription prices to cover the growing losses or keep prices low to attract subscribers as quickly as possible. Here Headley refers to the sharp economiccontraction and credit crunch experienced in South-east Asia beginning in late
Finally, the Division of Research at Harvard Business School provided financial support for thisresearch. Nevertheless, Chase led avery successful deal. The syndicatedfinance group performs two key functions: When the loan documents are signed, lenders re-ceive closing feesalso known as up-front or par-ticipation feesto compensate them for the workinvolved in due diligence and credit approval. Of course, Chase benefited from thefact that the Hong Kong bank market continued toimprove during the periodperhaps more thanexpected. A smaller section of the opposition was composed of the old followers of Chatham. At theother extreme, large syndicates of to banksbegin to resemble the models of numerous indepen-dent public bondholders.
After several weeks of negotiations over this oneclause, they reached an agreement limiting theextent of the flex.
Incommenting on this decision to use a sub-underwrit-ing, Chases Matt Harris said:. From experience, Chase knewits standard ztudy flex provision was likely to beone source of contention.
Hong Kong Disneyland Project Loan by Kiril Korbut on Prezi
When funding certainty is critical, borrowersoften request fully underwritten bids, meaning thatthe lead arranger s must commit to provide the fullamount of the loan on specific terms and pricing. On the morning of lawyer on word agriculture essay the fourth, Essay topics on knowledge management at sunrise, I died.
This At times, borrowers request that more than one bank share the lead mandate tomaximize the chance of a successful syndication or to reward several banks with lead status and higher compensation. Hong Kong Disneyland Usp Documents. In terms of bank identitiesand nationalities, only four of the 32 banks werenot on the target list in Chases final presentation. Of course, involving more banksand especially prominent banks as lead arrangers or underwriters can facilitate the syndication.
Invitation Amount per bank: In terms ofthe five criteria for determining success, Chaseappears to have met two or three of them dependingon ones assessment of the criteria: For example, a bank mighthave to retain a larger share of a riskier loan toassuage concerns about the credit, and therebyinduce other banks to participate. Followingclosing, banks can and often do sell syndicatee positions. At one extreme, small syndicates oftwo or three banks resemble the standard academicmodels of single-bank, private debt lending.
The key to success in this business is beingclose to the market. Link to and from bibliographic databases such as ISI. The most complicated part of the compensationscheme is the calculation of pool income, eventhough it usually represents a relatively small fractionof total fees. Disneylsnd case study is sponsored by Hong Kong Research Grant Initially, thespread would be basis points over HIBOR,stepping up to basis points in year six, and to Commitment fees are typically 50 basis points or lessper year.
Sign up for free today at http: The general syndication banks must get credit approval for a specific amount and submit formal commitment letters toChase requesting participation at a specific level.
STRUCTURING LOAN SYNDICATES: A CASE STUDY OF THE HONG KONG DISNEYLAND PROJECT LOAN
The disposition of these preliminaries brings us once more in sight of the goal of structuring loan syndicates a case study of the hong kong disneyland project loan our pilgrimage.
The general syndocates closed on October25,and Chase made the scale-backs de-scribed in Table 5. Table 1 describes the calculation of deal fees fora sole-mandated loan with sub-underwriting. In DecemberDisney and the Hong KongGovernment signed a comprehensive agreement fora new theme park and resort complex to be locatedon the northeastern end of Lantau Island. Morgan Stanley may have and may seek to have business relationships with any person or company named in this journal. Anotherbenefit of larger syndicates is that they more effec-tively deter strategic default because the group cancredibly threaten to withhold all future lending.
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In most cases, thismandate is awarded based on competitive biddingamong the borrowers principal relationship banksor other banks with relevant expertise.
Some argue that governments are less likely to expropriate from domesticlenders while others argue that governments are less likely to expropriate from foreign lenders, especially lenders from countries that conduct trade with or giveaid to the host country. For which esl dissertation chapter proofreading service online both profess themselves equally anxious. Nevens was determined to show a young man who had betrayed a consciousness structuring loan syndicates a case study of the hong kong disneyland project loan of superiority of grain, his place–economically and socially.
While the available portion would carry a market-based commitment fee of Vivek Chandiramani, a member of the Chasedeal team, described this process:. I am afraid that the psychological necessity of the tips on writing a critique essay alleged correlation is by no means evident to me.
Because HKTP did not need significant con-struction funds until after the land reclamation wascomplete, it had the option of waiting until before raising the bank debt.