Facility will replace original HK$3.2b borrowing but park may raise amount Hong Kong Disneyland is sounding out banks for refinancing options on a HK$3.2 billion loan taken out in 2000 to partially fund construction of the theme park, said a source familiar with the situation. The new debt will replace the current loan with the so-called 'step-on' margin in which the interest rate goes up after every few years. The format of the deal, whether it is a bond, loan or other type of financing, has not been decided. 'It's about time they would start thinking about it,' said one banker. The interest margin on the 15 year-loan rose this year to 1.25 percentage points above the Hong Kong interbank offered rate from the original one percentage point at the start of deal. That rate goes up to 1.28 percentage points in 2011. Disneyland set no deadline for bank proposals and could raise the size of the facility, sources said. 'Given current market conditions, a few more billion would not be difficult,' said another banker. Hongkong Land Holdings almost tripled the size of a seven-year loan it arranged earlier this year to HK$13.4 billion while a loan to refinance Central's International Finance Centre was raised 43 per cent to HK$10.3 billion last month. Outside the property sector, bankers pointed to the eight banks hired to arrange Shanghai Industrial Holdings' HK$3 billion loan and 17 banks that came together to arrange Tianjin Development Holdings' HK$2 billion five-year loan. Hong Kong's largest firms have seen their funding costs fall as bank deposits grow along with the global economy. Banks keen to use that cash in financing corporate expansion have been bidding down competitors for the right to lend. The original Disney loan was arranged by Chase Manhattan Asia which brought in more than 20 other banks, including Bank of China, BNP Paribas and HSBC. Banks earned 70 basis points of the deal size in fees. The debt - a HK$2.32 billion term loan and HK$1 billion revolving credit - was taken out to fund construction of the Lantau park which opened in September last year. It was oversubscribed to HK$5.4 billion but not increased. The loan was arranged through Hong Kong International Theme Parks, the joint venture of US-based Disneyland and the Hong Kong government, which owns a majority 57 per cent stake. To finance the project, the government provided a HK$6.1 billion subordinated loan and with Walt Disney raised HK$5.7 billion in equity. Disneyland plans to open a second theme park on reclaimed land next to the current park. The company recently delayed a planned expansion of the current park. The expenses involved forced Disney to scrap plans for an electric light parade and a combined Pirates of the Caribbean and Raging Spirits roller-coaster ride, sources said. All new attractions have to be paid for out of operating income. Disney executives said attendance was 'well over' five million after the park's first year of operation but short of the expected 5.6 million visitors.