By Prudence Ho And Yvonne Lee
HONG KONG-- HSBC Holdings PLC is providing Hutchison Whampoa
Ltd. with GBP6 billion (US$9 billion) in loans to fund the
conglomerate's $15 billion acquisition of one of Britain's biggest
cellphone operators, people with direct knowledge of the deal said
Monday.
Hong Kong-listed Hutchison, part of Hong Kong billionaire Li
Ka-shing 's global empire, said last week that it is in exclusive
talks to buy 02 from Spain's Telefonica SA for GBP9.25 billion in
cash, plus up to GBP1 billion that would be paid later if the
combination of O2 with Three, Hutchison's existing British carrier,
meets cash-flow targets.
The HSBC loan will cover only part of the $15 billion
acquisition. On Friday, when Hutchison said it was in talks to buy
O2, Hutchison Finance Director Frank Sixt said the deal would be
funded by bank loans but gave no further details. He said that once
Hutchison buys O2, it will sell as much as 30% of the company to
institutional partners, including private-equity firms.
HSBC, which is advising Mr. Li on the purchase, is also helping
the 86-year-old tycoon reorganize his empire into two companies,
separating his Hong Kong property assets from his internationally
focused conglomerate.
As part of that reorganization, HSBC and Bank of America Merrill
Lynch will provide Mr. Li's new property firm, Cheung Kong Property
Holdings, with a HK$55 billion (US$7.1 billion) bridge loan, or the
real-estate unit could get funding from a syndicated loan,
according to the stock-exchange filing earlier this month outlining
the reorganization. Cheung Kong Property will be created out of the
real-estate holdings of Mr. Li's flagship, Cheung Kong Holdings,
and its 49.97%-owned Hutchison.
The O2 acquisition will likely take around a year to be
completed, the people with knowledge of the deal said. Hutchison
said the deal is subject to regulatory approvals.
The O2 purchase caps a busy few weeks for Mr. Li in Europe, with
his companies also announcing takeover bids for a British train-car
maker and a Dutch drugstore chain. Besides being Mr. Li's
biggest-ever foreign acquisition, the O2 deal represents the
largest purchase overseas by an Asian firm since Japan's SoftBank
Corp.'s $21.6 billion buyout of Sprint Nextel Corp in Oct. 2012,
according to Dealogic.
Write to Prudence Ho at prudence.ho@wsj.com and Yvonne Lee at
yvonne.lee@wsj.com
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