Chinese e-commerce giant Alibaba Group is back in the loan market with an eye on a jumbo financing of up to $8bn to refinance existing debts, barely a year after borrowing $4bn in loans, according to sources.
Reuters reported that the borrower is said to have approached lenders seeking proposals for the loan, proceeds from which it will refinance$4bn in loans put in place last year as well as fund Alibaba’s obligations under a $7.1bn share buyback deal it struck with Yahoo Incorporated last May.
The Chinese internet company is refinancing its outstanding loans with a new borrowing to free itself from covenants that capped its borrowings to $4bn.
The additional $4bn it is raising from the latest borrowing will finance its share buyback deal with Yahoo.
As reported earlier, the buyback, agreed by Alibaba and Yahoo on 21 May 2012, will cost $7.1bn and will be funded by $6.3bn in cash and $800m through a new issue of preferred stock by Alibaba to Yahoo.
Sources expect Alibaba to pay lower pricing than on its loans signed last year, which were well received.
The $4bn in loans completed last year comprised a $1bn four-year facility signed in July by eight banks and three other loans of $1bn each signed in June.
The three other loans include two bilaterals of three and four years from China Development Bank, and a $1bn three-year facility from a group of 19 lenders. The three-year facility from 19 banks was part of a $3bn dual-tranche debut which also comprised a $2bn bridge that was taken out by CDB’s bilaterals.
The $1bn three-year loan from the 19 banks paid a top-level upfront fee of 300 basis points, while the $2bn 12-month bridge paid 175 basis points.
The $4bn in loans last year funded the privatisation of Hong Kong-listed Alibaba.com and financed the buyback of half of the 40 per cent stake Yahoo held in Alibaba.