Hong Kong Disney
In this case analysis I will first show the requirements the company had for its financing. Then I will provide an analysis of the main pros and cons for Chase in connection with the deal. Lastly I will show how both affected the pricing as well as the execution of the deal. In order to build the new Disneyland in Hong Kong a new non-recourse object, Hong Kong International Theme Parks Ltd (HKITP) was formed.
While the owners supported the project with substantial amounts of equity Disney and Government as well as with subordinated debt Government, Disney had significant requirements for the financing portion of the remaining needed amount. Disney was looking to receive bank financing for this new object of HKD as a Delay Draw Term Loan DDTL plus HKD working capital line “Revolving Credit Facility” or RCL. While they had learned from their most recent experience with Disneyland in Paris not to have a too aggressive capital structure in place, they nevertheless demanded significant flexibility with regard to the following terms and conditions a 15 year tenor - delayed amortization structure which would start as late as 3 years after the opening of the park, 8 years after closing of the loan and 6 years after funding of the loan.
This allowed CAPEX for further expansion instead of using FCF for amortization full underwriting of the deal by up to 3 Lead Arrangers no reduction of management and royalties. The main collateral for the deal is the land it would only become gradually available as the government first needed to reclaim the land Not only did Disney remain conservative with regard to the overall capital structure but they also chose to access the markets in 2000 in order to ensure access to funds at attractive pricing despite having to pay commitment fees during the first two years when the DDTL was undrawn.
From Chase’s perspective this prospective deal was interesting for the following reasons. First of all becoming a lead arranger for a
While the owners supported the project with substantial amounts of equity Disney and Government as well as with subordinated debt Government, Disney had significant requirements for the financing portion of the remaining needed amount. Disney was looking to receive bank financing for this new object of HKD as a Delay Draw Term Loan DDTL plus HKD working capital line “Revolving Credit Facility” or RCL. While they had learned from their most recent experience with Disneyland in Paris not to have a too aggressive capital structure in place, they nevertheless demanded significant flexibility with regard to the following terms and conditions a 15 year tenor - delayed amortization structure which would start as late as 3 years after the opening of the park, 8 years after closing of the loan and 6 years after funding of the loan.
This allowed CAPEX for further expansion instead of using FCF for amortization full underwriting of the deal by up to 3 Lead Arrangers no reduction of management and royalties. The main collateral for the deal is the land it would only become gradually available as the government first needed to reclaim the land Not only did Disney remain conservative with regard to the overall capital structure but they also chose to access the markets in 2000 in order to ensure access to funds at attractive pricing despite having to pay commitment fees during the first two years when the DDTL was undrawn.
From Chase’s perspective this prospective deal was interesting for the following reasons. First of all becoming a lead arranger for a