CVC Capital Partners Ltd. is seeking to bring in more lenders for a HK$2.5 billion ($322 million) loan backing the acquisition of telecommunications assets from City Telecom (HK) Ltd. (1137) by a company formed by CVC Funds, according to five people familiar with the matter.
JPMorgan Chase & Co. and Standard Chartered Plc, hired by CVC to underwrite and arrange the five-year facility, have held discussions with individual banks to discuss expanding the lender group, said the people, who asked not to be identified because the details are private. Banks are being asked to commit the equivalent of about $40 million to $50 million to the loan, the people said.
James Olley, an external spokesman for CVC at public relations firm Brunswick Group LLP in London, declined to comment when asked about the financing strategy by telephone yesterday.
Metropolitan Light Co., owned by a partner of funds advised by CVC Asia Pacific Ltd., will buy City Telecom’s businesses including Hong Kong Broadband Network Ltd. for HK$5 billion, according to an April 11 Hong Kong stock exchange filing. The purchase allows CVC to enter a telecommunications market where there is more than one fixed-line connection per household, according to data from the Office of the Communications Authority, the industry regulator.
To pay for the transaction, Metropolitan will receive HK$2.65 billion from funds advised by CVC Asia Pacific, and has access to HK$2.5 billion of debt from JPMorgan and Standard Chartered, City Telecom said in its filing.
The proposed sale requires the approval of City Telecom shareholders. Shares in City Telecom were trading 0.6 percent higher at HK$4.88 as of 10:06 a.m. in Hong Kong. The stock closed at HK$5.24 on April 11, the highest since June 8.
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