Power Assets seeks HK$37.5b loan facility
Li Ka-shing firm has approached banks for financing to back the electricity spin-off
Power Assets, controlled by Li Ka-shing, has approached banks for a HK$37.5 billion three-year term loan to back the spin-off of its Hong Kong electricity arm, three people familiar with the matter said.
Loan proceeds would be used to fund the acquisition of the entire stake of Hongkong Electric by the spin-off unit, HK Electric Investments, the people said. Price talk for the facility was at an all-in rate, which included interest and fees, of about 110 basis points over the Hong Kong interbank offered rate for minimum pledges of HK$3 billion, they said.
Power Assets was seeking to raise as much as US$5 billion by selling units in its Hong Kong electricity arm, two other people with knowledge of that plan said last month. The firm planned to sell as much as a 70 per cent stake in the division through a business trust structure, it said in a Hong Kong exchange statement last month. A US$5 billion sale would be the biggest initial public offering in the city since October 2010, when AIA raised US$20.4 billion.
A Hong Kong-based spokeswoman for Power Assets declined to comment on the loan financing yesterday.
Hongkong Electric, which started operations in 1890, provides electricity to about 568,000 customers. The company, one of two major power suppliers in the city, reported a profit of HK$4.5 billion last year and had a net asset value of HK$5.6 billion at the end of last year, according to the statement.
Outside Hong Kong, Power Assets has interests in businesses ranging from gas distribution to wind farms in Britain, Australia, the mainland, New Zealand, Thailand, Canada and the Netherlands. Earnings from its power assets outside Hong Kong increased to about HK$5.1 billion last year from HK$700 million in 2007, it said.
A HK$37.5 billion loan would be the second-biggest syndicated financing in Hong Kong this year after CNOOC's US$6 billion facility in February.