Bloomberg News

Hong Kong Exchanges Signs 543 Million Pound LME Acquisition Loan

June 26, 2012

Hong Kong Exchanges Signs 543 Million Pound LME Acquisition Loan

Hong Kong Exchanges’ $2.2 billion bid for the LME, seen here, values the world’s largest trading venue for industrial metals at 181 times earnings, making it the most expensive bourse acquisition exceeding $1 billion on record, according to data compiled by Bloomberg. Photographer: Jason Alden/Bloomberg

Hong Kong Exchanges & Clearing Ltd. (388) signed a 543 million pound ($848 million) loan which it will use to help finance its bid for the London Metal Exchange.

The facility, which matures in June 2013, pays a margin over the London interbank offered rate of 65 basis points for the first 180 days, rising to 85 basis points thereafter, according to data compiled by Bloomberg. Deutsche Bank AG, HSBC Holdings Plc and UBS AG provided the debt and Deutsche Bank acted as the facility agent, the data show.

Hong Kong Exchanges’ $2.2 billion bid for the LME values the world’s largest trading venue for industrial metals at 181 times earnings, making it the most expensive bourse acquisition exceeding $1 billion on record, according to data compiled by Bloomberg. The deal is seen as a way for the LME to expand into China, the world’s largest buyer of metals.

Scott Sapp, a spokesman for the Hong Kong bourse, declined to comment on the financing.

The offer of 107.6 pounds a share, or 180 times LME’s 2011 net income, requires approvals from LME shareholders and the U.K. Financial Services Authority. It doesn’t need shareholder consent in Hong Kong.

Hong Kong Exchanges said in a statement earlier this month that it will finance the acquisition from “existing cash resources and new bank facilities.”

“Short- and long-term loan facilities, totaling at least 1.1 billion pounds, sufficient to meet that part of the consideration that will not be financed through existing cash resources,” have been obtained from a group of banks including China Development Bank Corp., Deutsche Bank, HSBC and UBS, the company said in the statement.

The company said in the statement it expects to refinance part or all of the credit facilities at a later date via a combination of equity and bonds.

To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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