Thu, Nov 02, 2006 - Page 11 News List

MBK hires banks to fund purchase of cable TV operator

BLOOMBERG

Buyout firm MBK Partners Ltd hired Citigroup Inc and Chinatrust Commercial Bank (中國信託銀行) to arrange NT$31.5 billion (US$950 million) in loans to fund the purchase of Taiwan's second-largest cable television operator.

The two banks are inviting other lenders to take part in the loans, which will include NT$29.75 billion to buy China Network Systems Co (中嘉網路) and NT$1.75 billion to boost working capital at the cable TV firm, said a banker involved, who declined to be identified before the deal is completed.

MBK agreed last month to buy 60 percent of China Network for NT$30.9 billion.

The loans include a seven-year NT$16.75 billion part that pays interest 1.95 percentage points over Taiwan's primary commercial paper rate, the banker said.

There are also NT$11.25 billion of eight and a half year loans that cost 2.1 percentage points over the benchmark lending rate. The remaining NT$3.5 billion subordinated loan is for nine years and ranks behind the other loans in terms of repayment and security.

China Network is owned by News Corp's Star Group, which holds a 20 percent stake, and Taiwan's Koo family, which has 80 percent.

MBK Partners is a buyout group formed last year by five former Carlyle executives led by Michael Kim, who was previously Carlyle Asia chairman.

Buyout firms typically finance about two-thirds of an acquisition with debt by borrowing against the target's assets. They then seek to improve profits before selling the company within five years, often through an initial public offering.

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