Jkh Set To Draw Record Syndicated Loan

John Keells Holdings PLC (JKH) will be going for a 7-year syndicated loan to the tune US$445 million, the largest ever in the country, to partly finance its US$ 820 million Waterfront Project, according to foreign media reports.“Standard Chartered will be handling the process, and it will be at a LIBOR plus rate. We will get a fine rate,” JKH Deputy Chairman Ajit Gunawardene responding to an inquiry by Mirror Business said.

Prior to this, Sri Lanka’s largest loan was in March 2007 when the government obtained a ¥39.23bn (US$336 million at the time) 30-year facility from Japan Bank for International Cooperation. The loan funded a rural development project, a water sector development project and an urban transport development scheme in greater Colombo.Gunawardene confirmed that Standard Chartered, the sole mandated lead arranger, underwriter and bookrunner on the financing, had already given a US$ 100 million loan earlier this year, with the remaining US$ 345 million to be drawn from institutions targeted by the bank.

According to IFR Asia, a leading capital market magazine in Asia, a couple of commitments are already in, while four to five lenders are processing approvals, with syndication to launch shortly.The loan marks the third syndicated financing from Sri Lanka this year. In April, Sri Lankan Airlines sealed a US$150 million dual-tranche three-year Islamic financing in which six lenders participated, including sole structuring bank StanChart.

A month earlier, National Development Bank obtained a US$ 125 million financing package from the International Finance Corp and a bunch of commercial banks. In October 2013, JKH raised US$ 306.3 million for the project through a US$ 177.7 million rights issue with attached warrants worth US$ 128.6 million to be exercised in 2015 and 2016.

At the time of the announcement of the Waterfront Project, John Keells said the funding of the project would derive from a debt-equity mix.
“The integrated resort John Keells is building in Colombo, is the largest project the company has undertaken. It would be a landmark property development as it would change the face of the central business district in the country’s capital similar to how the Marina Bay Sands resort has transformed Singapore,” a source had divulged to IFRAsia.

The project, coming under Waterfront Properties (Private) Limited, will comprise of a luxury hotel, a multi-level retail arcade, conference centres, entertainment and gaming facilities, commercial office space and residential apartments.Parliamentary approval was granted by notification of a Gazette this January, following which construction commenced on the freehold land off Glennie Street, Colombo 02 valued at Rs.1.916 billion; which was previously occupied by JKH subsidiaries Ceylon Cold Stores PLC, John Keells PLC and John Keells Properties (Private) Limited.Waterfront is the largest of three planned integrated resorts in Colombo, with the others being the US$300 million Queensbury resort by Dhammika Perera’s Vallibel One, and James Packer’s US$ 400 million Crown Colombo Hotel and Casino project.JKH is expected to hold a 97 percent stake in Waterfront Properties (Private) Limited.