IFC Development Said to Consider Parent Guarantee on Loan

Sun Hung Kai Properties Ltd. (16), Henderson Land Development Co. and Hong Kong & China Gas Co., who jointly own IFC Development Ltd., may guarantee the unit’s HK$5 billion ($643 million) loan, according to a person familiar with the matter.

IFC Development is seeking the loan to partly refinance a HK$17.4 billion facility signed in 2007 and maturing in March 2012, the person said, declining to be identified because the details are private. The loan amount was reduced to HK$5 billion, from HK$17 billion the developer sought earlier this year, as market conditions deteriorated, a second person familiar with the matter said today.

A guarantee from the companies which own IFC would make the facility more attractive to lenders that are facing rising funding costs, the second person said.

Some terms of the deal including final size and the potential guarantee are still under negotiation, both people, who have direct knowledge of the transaction, said.

Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc., Oversea-Chinese Banking Corp., Sumitomo Mitsui Financial Group Inc. and United Overseas Bank Ltd. will likely lend at least HK$1 billion each, another person familiar with the matter said on Oct. 18.

The new loan pays an all-in rate, which includes margin and fees, of about 150 basis points more than the London interbank offered rate, the person said at the time.

Henderson Land and Sun Hung Kai Properties corporate communications officials didn’t respond to e-mails seeking comment on the loan.

To contact the reporter on this story: Wendy Mock in Hong Kong at wmock3@bloomberg.net

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