Fri, Mar 25, 2005 - Page 11 News List

Lenovo gets US$600 million loan for IBM purchase


Lenovo Group Ltd (聯想), China's largest computer maker, raised US$600 million from its first syndicated loan with 20 banks to help it purchase IBM Corp's personal computer business.

The five-year credit was arranged by Industrial and Commercial Bank of China (Asia) Ltd, BNP Paribas SA, ABN Amro Holding NV and Standard Chartered Plc. Sixteen other banks from China, Hong Kong, Europe, the US and other countries in Asia joined in the past two months, lending US$345 million, the credit's arrangers said in a joint statement.

"It's a successful transaction because Lenovo is a good name and pricing for this loan is decent," Oscar Tang, vice president of BNP Paribas loan syndication in Hong Kong, said yesterday.

Beijing-based Lenovo earlier this month overcame national security concerns to win US government clearance for the US$1.25 billion purchase of IBM's PC unit, which will vault Lenovo to third from eighth among global PC makers.

The deal is due to be finalized by mid-year.

Lenovo, which is partially owned by the Chinese government, agreed last December to pay US$650 million in cash, US$600 million in stock and assume US$500 million of debt to buy the IBM unit, which lost money in the three-and-a-half years through June 30.

Lenovo yesterday refused comment on reports that several US private equity firms are close to buying stakes in the company worth a total US$350 million.

"Lenovo has no official comment to media on its overseas private fund raising," said Guo Tongyan, Lenovo's spokesman in Beijing.

Guo acknowledged, however, that Lenovo was more likely to seek to raise funds through sales of equity than through new share listings overseas. The company's shares already are traded on the Hong Kong Stock Exchange, he noted.

The Wall Street Journal reported on Wednesday that three private-equity firms -- Texas Pacific Group, General Atlantic LLC and the Newbridge Capital LLC affiliate of Texas Pacific and Blum Capital Partners -- are close to taking a stake in Lenovo. That report and others cited unnamed sources saying the firms planned to spend about US$350 million, with Texas Pacific providing the largest stake of US$200 million, General Atlantic investing US$100 million and Newbridge Capital US$50 million.

Texas Pacific was Lenovo's leading contender for the IBM unit.

There is widespread skepticism in China over Lenovo's ability to manage the huge acquisition. The state-run newspaper China Financial News said Texas Pacific might be able, through a strategic investment, to lend its expertise in restructuring the IBM assets.

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