O
EAL OF THE MONTH
Bridging
SUBORDINATED EüROBOND
THE NETWORK
What'S News Issue 6 June 1997
info exchange
15
The deal: Arranging and
underwriting USD$ 18.75
million in Phase 1 project
financing for construction of
the first private hospital in
China.
The cliënt: Beijing Toronto
International Hospital, a
consortium of Canadian-based
and Chinese owners.
The players: Eduard van
Voorst, Brian But (Hong
Kong), Kun Lin Dong (Beijing),
Lydia Crowson (Chicago),
Arnold Kuijpers (RI Healthcare
Department).
In the late 1980's, the Chinese
Government decided that a
Kun Lin Dong (Beijing)
Lydia Crowson (Chicago)
Arnold Kuijpers (RI Healthcare Department)
Unfortunately photos of 'players'
Eduard van Voorst and Brian But were
unavailable when this issue
went to press.
healthcare system operating at
international standards was
needed to cater to the growing
population of expatriates,
foreign visitors and wealthy
Chinese nationals in Beijing.
They planned the first private
hospital to be huilt in the
country since the Communist
takeover in 1949. More than
80 international firms from
North America, Singapore, and
Europe bid for the business. In
March 1996, Interhealth
Canada (China) Inc. (ICCI), a
company sponsored by
Interhealth Canada and a
group of Chinese and
Singaporean investors, was
granted a 30-year license to
designs, construct, equip, staff
and manage the 250-bed
membership-hased facility.
The idea of project finance for
a private hospital in China was
unprecedented,' remarks
Eduard van Voorst, who
coordinated the innovative deal
out of Hong Kong.'I first heard
about this venture from
colleagues at Jardine Fleming.
They had identified
Singaporean partners who were
willing to directly invest in the
project and to bid on the
construction contract. But the
Canadians' license was
scheduled to expire unless they
could rapidly arrange project
finance to proceed. We
naturally realised there were
risks involved in such an
unprecedented deal. On the
other hand, we could also see
that this was a potential
strategie break into an
important new market. So, we
got to work engineering what
proved to be an attractive
financing arrangement and
managed to sign in mid-May.'
Essentially, we restructured and
underwrote the debt financing
of the project (USD$ 18.75
million out of a total project
cost of USD$ 27 million) and
are now involved in bringing
other banks in as partners and
thus reducing our exposure to
USD$5 million. This will be a
challenging exercise in
marketing since the loans have
been arranged on a 'non-
recourse' basis - meaning that
the project will have to pay for
itself out of forecast receipts.
Before loan drawdown the
forecasts provided by the
Canadian partners, and based
on their own extensive
experience in hospital
management, are to be
confirmed by a range of
independent engineering,
insurance, and hospital
management consultants.
Attractive interest rate margins
will compensate for the risks
and additional costs of
consultants fees.
The first phase of the Beijing
LEAD MANAGEMENT WOLTERS KLUWER
Our Investment Banking arm recently captured an important
mandate to lead manage a NLG 500 million subordinated Eurobond
for Wolters Kluwer,the Dutch publishing group.When the company
first approached Rabobank International, it indicated a general
interest in a credit facility that it might be able to access at some
unspecified point in the future. Investment Banking helpfully
formulated several possible constructions that might meet their needs
- including a private placement - before Wolters Kluwer finally settled
on the subordinated debt. By offering the most competitive price, we
were able to capture the lead management role.Then, leveraging our
strong placement network, we ensured that Wolters Kluwers' 10-year
debt was rapidly and fully subscribed upon its flotation in May.The
deal involved Johan Roepman and Paul Michielsen of Investment
Banking with assistance from Rolf Michon, Rabobank's Wolters Kluwer
account manager, as well as Robin Bargmann of the executive board.
The clear lesson? Delivery of customer value consistently spells the
difference between victory and defeat.
Lai Chong Tuck of our Vietnam
rep office is currently
celebrating a very neat deal for
customer GSB Group. 'We have
been working on this USD 7
million bridging facility for quite
a while now; it was finally
signed on May 12. Drawdown
on the first USD 3 million was
May 13. It's great news.'The
facility goes to a cliënt who has
already done business with RI in
Vietnam.'Last year.we
committed a seven-year, USD 5
million APFT loan to them.That
involved the APFT teams in
both Utrecht and Singapore
and we made a nice return on
that transaction. Now, the
facility brings together teams
from Paris, Singapore and
Utrecht. I'd like to thank all our
people around the network
who shared this great effort
with us here in Vietnam for their
commitment and dedication.'
project is expected to start
operation in early 1998 and
will bring some 60 in-patient
beds as well as primary care,
laboratory, diagnostics and
other services on-line. The
later phases of planned
expansion, including possible
expansion into other large
Chinese cities, will be financed
from internal cash flow to be
generated by membership
income and from medical
services. BCIC, the main
Chinese shareholder of the
hospital, will be responsible for
coordinating and managing
regulatory and other
relationships with local
government authorities. ICCI
will facilitate technology
exchange and will contract out
the management with
Chedoke-McMaster Hospitals,
a Toronto-based university
hospital.
Thus, thanks to Rabobank's
strategie commitment to
healthcare not only in Western
societies but also in important
emerging markets, we have
been able to make our first step
in a remarkably short time.
