NOL aggressive in demands for Hapag-Lloyd loan
Neptune Orient Lines , undaunted by the global credit crunch, is seeking bold terms for a loan of up to $7 billion to finance a takeover bid for Germany's Hapag-Lloyd, banking sources said on Tuesday. NOL is seeking a "covenant-lite" two-year loan, with an indicative price of 150 basis points above London Interbank Offered rate, sources said. The premium over LIBOR includes fees and margins. The covenant-lite loan looks like a traditional syndicated loan, but does not carry the legal clauses that allow investors to track the performance of a borrower or declare a default if financial measures are breached.
"It is a borrower's term sheet," a banker, who has seen the term sheet, told Reuters, adding the terms were aggressive in current market conditions, where the year-long credit crisis has significantly raised the cost of borrowing globally.
According to Reuters Basis Point, Hong Kong-based PCCW <0008.HK>, which is controlled by billionaire Richard Li, is looking to raise $3 billion at 170 basis points above LIBOR to refinance existing debt.
The time period of the NOL loan was not clear, but typically such loans are made at three-month Libor plus a premium.
Bankers believe the backing of a Singapore sovereign wealth fund may help NOL secure better terms.
NOL is 66-percent owned by Temasek Holdings, which is rated AAA by rating agency Standard & Poor's. NOL declined to comment on the deal.
One banker said banks which are pitching for the deal have been given until the end of July or early August to submit their proposals.
The release of the term sheet came despite the resignation of NOL's German chief executive, Thomas Held, last week. Most analysts believe the new chief executive, who used to head the firm's container-shipping arm, will pursue the bid. Banking sources told Reuters recently that NOL was talking to Singapore's three local banks -- DBS Group , Oversea-Chinese Banking Corp and United Overseas Bank , as well as with some foreign banks for the loan.
Reuters Basis Point on Tuesday named BNP Paribas , Citigroup , HSBC , the corporate banking unit of Mizuho Financial Group, Royal Bank of Scotland and the banking unit of Sumitomo Mitsui Financial Group as among the other banks in the race.
The merger of NOL and Hapag-Lloyd could potentially create the world's number three container shipping group, behind Danish shipping group A.P. Moller-Maersk and privately-owned Mediterranean Shipping Co.
NOL has a market value of $3.4 billion and several analysts have said any merger will require the financial support of major shareholder Temasek.
NOL has said it is interested in Hapag-Lloyd but has never confirmed it was in takeover talks. It has yet to launch a bid.
"It is a borrower's term sheet," a banker, who has seen the term sheet, told Reuters, adding the terms were aggressive in current market conditions, where the year-long credit crisis has significantly raised the cost of borrowing globally.
According to Reuters Basis Point, Hong Kong-based PCCW <0008.HK>, which is controlled by billionaire Richard Li, is looking to raise $3 billion at 170 basis points above LIBOR to refinance existing debt.
The time period of the NOL loan was not clear, but typically such loans are made at three-month Libor plus a premium.
Bankers believe the backing of a Singapore sovereign wealth fund may help NOL secure better terms.
NOL is 66-percent owned by Temasek Holdings, which is rated AAA by rating agency Standard & Poor's. NOL declined to comment on the deal.
One banker said banks which are pitching for the deal have been given until the end of July or early August to submit their proposals.
The release of the term sheet came despite the resignation of NOL's German chief executive, Thomas Held, last week. Most analysts believe the new chief executive, who used to head the firm's container-shipping arm, will pursue the bid. Banking sources told Reuters recently that NOL was talking to Singapore's three local banks -- DBS Group , Oversea-Chinese Banking Corp and United Overseas Bank , as well as with some foreign banks for the loan.
Reuters Basis Point on Tuesday named BNP Paribas , Citigroup , HSBC , the corporate banking unit of Mizuho Financial Group, Royal Bank of Scotland and the banking unit of Sumitomo Mitsui Financial Group as among the other banks in the race.
The merger of NOL and Hapag-Lloyd could potentially create the world's number three container shipping group, behind Danish shipping group A.P. Moller-Maersk and privately-owned Mediterranean Shipping Co.
NOL has a market value of $3.4 billion and several analysts have said any merger will require the financial support of major shareholder Temasek.
NOL has said it is interested in Hapag-Lloyd but has never confirmed it was in takeover talks. It has yet to launch a bid.