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HONG KONG |
Mon Feb 20, 2012 5:34am EST
HONG KONG (Reuters) - Chinese e-commerce firm Alibaba Group is set to sign on Monday a $3 billion loan it plans to use to take private its Hong Kong-listed unit, Alibaba.com, Thomson Reuters publication Basis Point reported.
Alibaba Group, which is 40 percent-owned by Yahoo Inc, is looking to take Alibaba.com private in a bid to strengthen founder Jack Ma's control of his e-commerce empire.
Alibaba owns 73 percent of Alibaba.com, which operates an e-commerce website linking Chinese businesses to overseas buyers. The rest of the stock is publicly traded and held by investors including Morgan Stanley, Vanguard Group and Capital International, according to Thomson Reuters data.
Six banks - ANZ, Credit Suisse, DBS Bank, Deutsche Bank, HSBC and Mizuho Corporate Bank - have each provided underwritten commitments of $500 million for the loan, which was reduced from the $4 billion sought in early December to attract more lenders.
Alibaba Group has been in negotiations with Yahoo to swap 25 percent of the U.S. Internet group's stake in Alibaba as part of a complex $17 billion deal that would strengthen Ma's control, and give Yahoo cash, a possible stake in one of Alibaba's operating businesses and a residual 15 percent stake in Alibaba.
But sources told Reuters last week that those talks were deadlocked over how best to value Taobao, Alibaba's fast-growing online retail business.
The loan will be used to help fund taking Alibaba.com private, and not the buyback of part of Yahoo's stake in the group, Basis Point said.
Taking Alibaba.com into private ownership was not a pre-requisite for any broader deal for Ma to buy back the Yahoo stake, sources with knowledge of the talks have said.
An Alibaba Group spokesman declined to comment on the report on Monday.
Once the loan is signed, advisers to Alibaba - Credit Suisse and Deutsche Bank - will provide a letter stating there is certainty of funding to take Alibaba.com private. Based on that letter, the Hong Kong stock exchange would give the go-ahead for that process, sources told Basis Point.
A formal announcement on the loan and the going-private process is expected on Wednesday. Alibaba.com is due to announce its fourth-quarter results late on Tuesday.
Alibaba.com shares have been suspended from trading since February 9 pending an announcement by its parent.
The underwritten $3 billion loan is split into a $2 billion 12-month bridge and a $1 billion three-year term loan.
The tenor and pricing of the deal are yet to be finalized. The borrower had originally sought a three-year financing with a margin of around 450 basis points over Libor.
(Reporting by Prakash Chakravarti; Editing by Gavin Stafford and Ian Geoghegan)
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