Bank of China International Capital, Barclays Capital, BNP Paribas, HSBC

There could be no other candidate to win loan of the year, or indeed deal of the year, since Asia has never seen a transaction such as this one before. At more than twice the size of the previous record holder, the $12 billion facility changed the face of Asia's syndicated loan market forever and opened the door for leveraged financing across the broader spectrum of the region's capital markets. That the company behind it was only 10 months old ? an internet start-up, with absolutely no credit history, little cash flow and its initial growth fuelled almost entirely by a stock market frenzy in tech stocks ? was even more astounding.

A confluence of history, opportunistic thinking and the extensive patronage commanded by Hong Kong tycoon Li Ka-Shing and his family lay behind the transaction's ultimate success. For the Asian syndicated loan markets, the deal proved to be an easy test of its ability to absorb funding in size.

Long considered the poor relation of the international bond market, in this instance the sector showed corporate Asia how it might be able to raise a very large sum of money at very short notice. At the heart of the deal was the desire of PCCW head Richard Li to acquire Hong Kong Telecom (HKT) from its UK parent Cable &Wireless. Intending to offer shareholders either an all share alternative, or a combination of cash and shares, $12 billion was needed to fund the possible cash element of the offer.

For the four coordinating arrangers that had to irrevocably commit $12 billion up-front under Hong Kong's takeover code, it was a matter of mitigating the risk of lending to PCCW. Cleverly the four decided to structure a deal as a leveraged financing secured against the assets of the target company HKT. As a result, a non-recourse structure through an SPV owning the HKT shares was embraced.

Hostile acquisition financings generally require generous margins, rich fees, short-term maturities and clearly defined take-out strategies, so that the net effect on banks' loan portfolios is not overly severe. In PCCW's case, headline pricing appeared generous in a regional context but less so in an international context given recent precedents. So too, where it had become rare for a European deal to have a debt/Ebitda ratio of more than 5.5 times, PCCW's loan carried a ratio of nine times based on HKT's Ebitda of $1 billion.

Yet, aggressive pricing and extension clauses enabling PCCW to term out the debt if necessary, failed to act as a deterrent during syndication. Some 30 banks were invited and contrary to most loan syndications where up to half might decline, 27 accepted. Extension clauses also proved unnecessary. Despite a severe contraction in its stock price, PCCW is at year-end, calling on its many relationships again and raising $4.7 billion to cover the remaining $4.08 billion that is left to re-finance of the original loan. It was a remarkable deal done by a remarkable company. Without it PCCW's purchase of C&W HKT could never have taken place.

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