Basis Point-Alibaba shortlists 5 banks for $8 bln jumbo loan
HONG KONG, March 27 (Basis Point) - Chinese e-commerce giant Alibaba Group has shortlisted five banks to form an initial arranger group for its $8 billion jumbo loan according to sources, expected to be one of the largest financings in Asia this year.
The banks are: Citigroup, Credit Suisse, HSBC, JP Morgan and Morgan Stanley.
The loan will be split into three- and five-year maturities, the sources added.
Alibaba had a meeting with representatives from the five banks today, according to one of the sources. The arranger group is likely to be further expanded in the coming weeks, said another source.
Alibaba declined to comment.
Part of the proceeds will refinance $4 billion in loans put in place last year, as well as for general corporate purposes. The Chinese internet company is refinancing its outstanding loans with a new facility to free itself from covenants that capped its borrowings to $4 billion.
Some sources had said earlier the additional amount Alibaba is raising from the latest loan could help fund its obligations under a $7.1 billion share buyback deal it struck with Yahoo Inc last May. The share buyback deal had closed last year but there could be some obligations from that deal that need financing support.
As reported earlier, the buyback, agreed by Alibaba and Yahoo on 21 May 2012, cost $7.1 billion and was funded by $6.3 billion in cash and $800 million through a new issue of preferred stock by Alibaba to Yahoo.
Sources had said earlier that Alibaba is expected to pay lower pricing than on its loans signed last year, which were well received.
The $4 billion in loans completed last year comprised a $1 billion four-year facility signed in July by eight banks and three other loans of $1 billion each signed in June.
The three other loans included two bilaterals of three- and four-year tenors from China Development Bank and a $1 billion three-year facility from a group of 19 lenders. The three-year facility from the 19 banks was part of a US$3bn dual-tranche debut which also comprised a $2 billion bridge that was taken out by CDB's bilaterals.
The $1 billion three-year loan from the 19 banks paid a top-level upfront fee of 300 basis points, while the $2 billion 12-month bridge paid 175 basis point. The 19 lenders included six original mandated lead arrangers and bookrunners: ANZ, Credit Suisse, DBS, Deutsche, HSBC and Mizuho.
The $4 billion in loans last year funded the privatization of Hong Kong-listed Alibaba.com as well as the buyback of half of the 40 percent stake Yahoo held in Alibaba.