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MTR Said to Seek $1.9 Billion Loan Amid Special Dividend Plans

  • Government-controlled subway operator seeks syndicated loan
  • MTR to pay dividend after accepting government rail-link funds

Hong Kong railway operator MTR Corp. is seeking a HK$15 billion ($1.9 billion) syndicated loan, people with knowledge of the matter said, just two weeks after shareholders approved a special dividend to be paid with borrowed money.

The facility will be split equally between a three-year bullet loan and a five-year revolver, the people said, asking not to be identified as the information is private. BOC Hong Kong Holdings Ltd., Bank of Tokyo-Mitsubishi UFJ Ltd., HSBC Holdings Plc and Mizuho Financial Group Inc. are the mandated lead arrangers for the deal, according to the people.

MTR’s borrowing will add to the current $58.8 billion loan pipeline in North Asia, according to data compiled by Bloomberg. Hong Kong companies have raised HK$17.7 billion of syndicated loans so far this year, the data show.

The bullet loan tranche will have an interest rate of 54 basis points more than the Hong Kong interbank offered rate, while the revolver will pay a margin of 64 basis points above Hibor, according to the people. The margin on the bullet loan would be the lowest for a Hong Kong blue-chip company since 2007, Bloomberg-compiled data show.

Earlier this month, shareholders of MTR approved a plan to pay a special dividend and accept government funding for a cross-border express rail project. MTR, which is controlled by the Hong Kong government, said in January it plans to finance the HK$25.8 billion special dividend through additional borrowings.

MTR can execute the loan facility agreement any time before Sept. 30, according to the people. Proceeds will be used for general corporate purposes, the people said, without providing further details. 

Representatives for MTR didn’t answer phone calls outside regular Hong Kong business hours Tuesday and didn’t immediately respond to an e-mail seeking comment.

Besides the Hong Kong subway system and other services in the city, MTR runs rail systems in cities including Beijing, Melbourne and Stockholm.

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