STRUCTURING LOAN SYNDICATES: A CASE STUDY OF THE HONG KONG DISNEYLAND PROJECT LOAN

Benjamin C. Esty

Journal of Applied Corporate Finance, 2001, vol. 14, issue 3, 80-95

Abstract: The volume of global syndicated loans has increased from $413 billion in 1990 to $2.195 trillion in 2000, making it not only the largest source of corporate funds in the world but also one of the fastest growing. Yet despite the size of this market and its importance as a source of corporate funds, there has been relatively little research on syndicated lending and little understanding of the structuring intricacies underlying these deals. In this article, the author analyzes the process by which Hongkong International Theme Parks Limited (HKTP), an entity jointly owned by The Walt Disney Company and the Hong Kong Government, raised HK $3.3 billion (approximately US $425 million) in the syndicated loan market to finance part of the construction and operation of its Hong Kong Disneyland theme park and resort complex. Using this case study of the HKTP financing, the article moves beyond the overly simplistic (albeit theoretically tractable) models of debt choice favored by academics and begins to explore the dynamics and consequences of various real‐world debt structures. Rather than focusing on the credit analysis or documentation issues, the author focuses on the structuring and distribution issues because they are both less well understood and provide interesting insights into debt management.

Date: 2001
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