HONG KONG DISNEYLAND

• Disney and Hong Kong Government signed

an agreement for a new theme park and
resort complex on the north-eastern end of
Lantau Island in December 1999

• Project was expected to operate in three

phases

• In August 2000, Hong Kong International Disneyland, Hong Kong

Theme Parks Limited (HKTP), an entity was
formed by HK Government and Walt Disney
for the construction and operation of the
resort

• Total cost for the project was HK $ 28

billion. Half of the total cost for the project
comprised land reclamation and
infrastructure development funded by Hong
Kong Government
Disneyland Resort, Hong Kong
• Remaining half cost of the project will be raised via sources like equity (HK
government – HK $ 3.25 billion and Disney – HK $ 2.45 billion) and HK $ 6.1
billion in the form of subordinated debt by HK Government.

• Rest of HK$ 2.3 billion was expected to be financed via commercial bank loans.
Owners of the project agreed to raise HK$ 2.3 billion 15-year nonrecourse term
loan and HK$ 1 billion nonrecourse revolving credit facilities for working capital
requirements post construction

Construction, HK Disneyland
 THE APPROACH
Earlier HKTP felt no requirement of construction funds till land reclamation
stage. Therefore, they thought of waiting until 2002 for raising bank debt

However, later HKTP decided to start by early 2000 to get aware of

structuring and syndication process

Team headed by Jeff Speed was assigned the responsibility of raising the
funds

Team hoped of raising loan on a fully underwritten basis and was expected
to select three lead arrangers for raising funds
CHASE MANHATTAN’S STRATEGY
Chase was the 3rd largest bank in United States and a leader in the field of
syndicated finance

Chase was the lead arranger for 34% of the total world’s syndicated loans

After receiving an initial conference call from Disney, Chase deal team studied
their term sheet and raised several questions on its desire to win the mandate
3 Approaches to the Deal No Bid Bid to Win Bid to Loose.

No Bid Approach Initially, Chase was not interested in the Hong Kong
Disneyland

Bid to Lose Approach Reason for choosing this approach was: a) Chase can
save its face as a relationship bank and also get prevented from the credit and
underwriting risk in the deal

Bid to win approach required aggressive bidding with competitive pricing