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Hitachi’s U.K. Train Venture Said to Plan 2.1 Billion Pound Loan

Hitachi Ltd. (6501)’s U.K. unit hired banks to arrange about 2.1 billion pounds ($3.3 billion) of loans to help fund the purchase and maintenance of trains on the Great Western Main Line route, according to three people familiar with the matter.

Agility Trains, a consortium comprising Hitachi and Henderson Group Plc (HGG)’s infrastructure developer John Laing Plc, expects to complete the borrowing this week, said the people, who asked not to be identified because the details are private. The facility will have a maturity of 20 to 30 years, they said.

Tokyo-based Hitachi, which provided high-speed trains for the British side of the Channel Tunnel, won the 4.5 billion- pound train order as part of the Agility Trains group, the U.K.’s Department for Transport said in a statement today. The so-called Intercity Express Programme is a project to replace Britain’s Intercity 125 trains with new, higher-capacity modern trains, according to the statement.

Hitachi will assemble an intercity fleet of 92 trains at a new purpose-built factory in Newton Aycliffe, County Durham, England. It will also construct maintenance depots in Bristol, Swansea, west London and Doncaster, and upgrade its existing maintenance depots throughout Britain.

“Hitachi is the latest major international company to invest on this scale in Britain,” U.K. Transport Secretary Justine Greening said in the statement. “It means 730 new skilled jobs created at the factory, 200 jobs in constructing the plant and thousands of jobs secured in the supply chain.”

Atsushi Konno, a Tokyo-based manager in the public relations section of Hitachi, declined to comment on the financing when reached by telephone today.

Arranger Group

A total of 10 banks, including HSBC Holdings Plc, Lloyds TSB Bank Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., Mizuho Financial Group Inc. (8411), Sumitomo Mitsui Banking Corp., Sumitomo Mitsui Trust Bank Ltd. and Japan Bank for International Cooperation, will help provide the financing, the people familiar with the matter said. HSBC is the deal’s financial adviser, they said.

Hitachi has $11 billion-equivalent of bonds and loans outstanding, according to data compiled by Bloomberg. The maker of nuclear reactors and air-conditioners is rated A3 by Moody’s Investors Service, its fourth-lowest investment grade.

Shares of Hitachi fell 2 percent to 434 yen at close of trading in Tokyo. The stock has gained 7.4 percent this year, compared with the Nikkei 225 Stock Average's 1.1 percent drop.

To contact the reporter on this story: Emi Urabe in Tokyo at eurabe@bloomberg.net

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

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