Chase's Strategy for Syndicating the Hong Kong Disneyland Loan

2017 Words9 Pages
ADVANCED CORPORATE FINANCE

Chase’s Strategy for
Syndicating the Hong Kong
Disneyland Loan

Group 1
AFNONIN, Artem 3035162144;

ARDERN, Jeffrey 3035160914;
GUPTA, Agrata 3035161097;
KUTUZOVA, Ekaterina 3035162156;

Disneyland - Chase Case Study
Q1: How should Chase have bid in the first round competition to lead the
HK$3.3 billion Disneyland financing?
After being approached by Disney to raise HK$3.3 billion nonrecourse loan package on a fully underwritten basis, Chase had three options available to approach the deal:




No Bid
Bid to Lose
Bid to Win

Initially Chase decided to Bid to lose because Disney had been their important client however the deal did not seem very attractive because of these reasons:
1. The deal had long tenor.
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Each of them varies role of Chase as an arranger of syndicated loans. It was quite good time for loan syndication as there were good indications of market recovery and tightening of credit spreads which meant higher liquidity on the market. Chase would include other underwriters to reduce exposure risk and these underwriters would be confident in success of a deal due to favorable economic conditions and solid reputation of Chase bank as a lead international underwriter. What’s more there is another argument in favor of success – HK government agreed to provide subordinated loan of HKD 6.1 bn which is almost twice the size of syndicated loan provided by the banks.
Talking about potential threats – there is a case of Disneyland in Europe where the deal didn’t go smoothly at all and also maturity of loan – 15 years. Comparing it with average 3-5 years, it is possible to deduce that there are some long term risks, which are definitely undesirable for Chase. Also overall amount of loan is USD 423 million which is almost 3 times more than average syndicated loan issued by
Chase in that year(1999).
So in the first strategy Chase would be single mandate arranger with 4 banks to act as sub-underwriters and lead arrangers (therefore getting higher fees) in exchange for HKD 660M commitment each. After that they will allocate it to 4 arrangers, 4 co-arrangers and 2 lead managers totaling number of banks as
15. Final
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