Bangkok Bank and Krungthai Bank (KTB), the country's largest and second-largest banks, will join Siam Commercial Bank (SCB) in a US$6-billion (Bt180 billion) bridge loan to back CP All's acquisition of cash-and-carry retailer Siam Makro.
Under the sale-and-purchase agreement with SHV Nederland BV - the major shareholder in Siam Makro - a condition precedent is that CP All will pay about Bt121.536 billion to SHV, according to its report to the Stock Exchange of Thailand filed on Tuesday.The remainder of the payment will be made after all shareholders of Makro accept the tender offer for 85.57 million shares at a price of Bt787 per share, or about Bt67.34 billion.
SCB, the sole financial adviser and one of the joint mandated lead arrangers and underwriters of the deal, has approached BBL and KTB to join the 18-month bridge loan, said Arthid Nanthawithaya, SCB senior executive vice president.
Along with the three Thai banks, four foreign banks - HSBC Holdings, Standard Chartered, Sumitomo Mitsui Banking Corp and UBS AG - will jointly finance the bridge loan.
Arthid said the first lot of the bridge loan would be made after June 12, the date of the CP All shareholders meeting.
The seven banks are expected to lend roughly equal amounts to CP All.
Chartsiri Sophonpanich, president of Bangkok Bank, said recently that it was in the process of facilitating its portion of the loan.
A source at KTB said the bank had received permission from the Bank of Thailand to exceed the single-lending limit to finance the bridge loan to CP All.
The source said KTB expected to lend about Bt30 billion to CP All, considered acceptable given the bank's total assets of Bt2.33 trillion.
Based on the CP All deal, KTB might raise its lending-growth forecast this year from its current target of 8-9 per cent. The bank will review the target in the second half, the source said.
To maintain a healthy yield, the bank will likely be more selective after joining the CP All loan. "Deals that give low yield might not be very active, as corporate loans in general generate slim margins compared with SME [small to medium-sized enterprise] and retail loans," he said.
The CP All deal, however, is expected to provide a reasonable margin to the bank and is seen as a good opportunity for KTB. CP All and Siam Makro have clean debt sheets and high profitability, meaning the debt could be converted from a bridge loan to a long-term loan in 18 months.
