RLPC-Utility Power Assets raising $4.84 bln loan for HKE spinoff
LONDON Oct 4 (Reuters) - Hong Kong conglomerate Hutchison Whampoa Ltd's utility Power Assets Holdings is raising a HK$37.5 billion ($4.84 billion) loan to back the spinoff of Hongkong Electric (HKE), bankers told Thomson Reuters Basis Point on Friday.
Power Assets said on Sept. 27 that it planned to reduce its 100 percent shareholding in HKE to between 30 percent and 49.9 percent through a spinoff and a separate Initial Public Offering (IPO).
Hutchison has an indirect interest in Power Assets through a 76.4 percent stake in Cheung Kong Infrastructure Holdings Ltd (CKI), which owns a 38.9 percent stake in Power Assets.
Hutchison has invited the 17-bank group that signed a $3.6 billion loan for Hutchison Port Holdings Ltd in September to join the new three-year term loan, along with banks involved in HKE's planned IPO, sources said.
The 17 banks are: ANZ, Bank of America Merrill Lynch, Bank of China Hong Kong, Bank of Tokyo-Mitsubishi UFJ, Citigroup, Commonwealth Bank of Australia, Credit Agricole CIB, DBS Bank, Deutsche Bank, HSBC, Mizuho Bank, OCBC Bank, RBS, Scotiabank, Standard Chartered Bank, Sumitomo Mitsui Banking Corp and UOB.
IFR previously reported Goldman Sachs and HSBC are joint sponsors of HKE's listing. HKE's IPO is expected to raise $4-5 billion in the fourth quarter, sources said.
The spinoff will be in the form of a business trust which will be called Hong Kong Electric Investments.
HKE posted a profit of HK$1.74 billion in the first six months of 2013 and HK$4.54 billion in 2012, which made up 37 percent and 47 percent of Power Assets' earnings, respectively.
Potential lenders are asked to commit as much as HK$3 billion, sources said, All-in pricing on the loan including fees is around 110 basis points (bps), they added.
Hutchison Port Holdings paid a margins of 60 bps, 110 bps and 140 bps on one, three and five-year tranches on the $3.6 billion loan signed last September. Banks received a 50 bps upfront fee.
Ratings agency Fitch described the impact of the spinoff as minimal on Hutchison Whampoa on Oct. 3 as dividends from Power Assets accounted for only 4 percent of Hutchison Whampoa's EBITDA in 2012.
If successful, the spinoff is expected to have more impact on CKI. Fitch put CKI's 'A-' rating on negative watch on Monday and said that the spinoff will weaken the quality of CKI's cashflows. ($1 = 7.7544 Hong Kong dollars) (Editing by Tessa Walsh)
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