Case Study: Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan (a)

2374 Words Dec 1st, 2014 10 Pages
Case Study: Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan (A)

Q1. How should Chase have bid in the first round competition to lead the HK$3.3 billion Disneyland financing?
1.Three ways to approach this deal
1) bid to win, 2) bid to lose and3) no bid. Chase chose to bid to lose on the first round, but just enough to make it to the short list. Also, since Chase is one of Disney's relationship banks, Chase would not want to ruin this relationship by not bidding on their project.
If Chase wanted to lead the competition from the first round, they should have made a bid that was more aggressive and aimed to win. This bid would have been closer to the desires of Disney, making them more appealing and
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Q2. As Disney would you sign the standard commitment letter? Which parts might concern you and why? As Chase, which parts are you willing to alter or remove?
From Disney's standpoint, they should sign the commitment letter. Chase has had maximum flexibility with the desires of Disney. Chase has probably allowed terms that other banks would not have been so easy to accept, which might be because of the strong relationship between the bank and Disney. The only clause that might concern Disney is the "Market flex provision". However, given how flexible Chase is being with most of the terms, it is only reasonable that they protect themselves from some of the risks involving the Hong Kong Dollar fluctuations. It is as Chandiramani, of the Chase deal team, argued: "Things can change between the time you sign a deal and the time you try close it".
On the other hand, from Chase's point of view, they should not alter any more of the covenants of the commitment letter. They have already been flexible enough with Disney in giving them most of their demands. However, they
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