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GIC wants to buy Japanese hotel chain: WSJ
Wednesday, February 17, 2010
The Government of Singapore Investment Corporation (GIC) wants to take over the Japanese ANA hotel chain, which it earlier helped Morgan Stanley to buy, and is discussing terms with other lenders, reports the Wall Street Journal.
Morgan Stanley may have to hand over the keys to the $2.4 billion hotel chain when the debt falls due in April, says the report.
Citigroup and Japan's Shinsei Bank, the two main creditors, are pushing Morgan Stanley to put more equity in the hotel chain, which includes the ANA Intercontinental in Tokyo, to give the depressed holdings more security.
But Morgan Stanley has hesitated because Japanese property values have fallen since it completed the acquisition of 13 hotels and two property-management units from All Nippon Airways for 281.3 billion yen, or $2.4 billion at the time, in June 2007. It was then the biggest hotel transaction in Asia, says Reuters.
Citigroup and Shinsei lent Morgan about 180 billion yen in senior debt to make the purchase, says the Journal.
GIC, the third creditor, provided mezzanine financing, a mix of debt and equity, which is next in line to get wiped out after Morgan Stanley's equity if the Singapore fund doesn't do something to protect its stake, it adds.
GIC booked losses on its $675 million investment in Stuyvesant Town/Peter Cooper Village complex, an apartment complex in Manhattan, New York, in which also it held a mix of debt and equity.
That's small potatoes, however, compared with its multibillion-dollar UBS losses.
GIC will be hit with a paper loss of about 7.85 billion Swiss francs (around $7.26 billion), converting notes into shares that would give it a 6.6 per cent stake in UBS, making it the biggest shareholder of the Swiss bank, according to the Straits Times.
GIC invested 11 billion Swiss francs in UBS, but now its UBS shares are worth just 3.15 billion Swiss francs, says the newspaper.
Meanwhile, Temasek Holdings has cut its stake in India's No.2 lender ICICI Bank to 5.9 percent from 8.3 percent, reports Reuters.
GIC's strategy could be different from that of Temasek, which has been more cautious since the financial crisis and has done very few blockbuster deals, says another Reuters report. Temasek, the smaller of the two Singapore sovereign wealth funds, has largely bought small stakes in Chinese firms, IPOs or has supported its portfolio companies, it adds.
GIC's recent investments have been diverse, ranging from the hotel industry and China property developer Longfor to a videogaming firm, says Reuters.
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Wednesday, February 17, 2010
The Government of Singapore Investment Corporation (GIC) wants to take over the Japanese ANA hotel chain, which it earlier helped Morgan Stanley to buy, and is discussing terms with other lenders, reports the Wall Street Journal.
Morgan Stanley may have to hand over the keys to the $2.4 billion hotel chain when the debt falls due in April, says the report.
Citigroup and Japan's Shinsei Bank, the two main creditors, are pushing Morgan Stanley to put more equity in the hotel chain, which includes the ANA Intercontinental in Tokyo, to give the depressed holdings more security.
But Morgan Stanley has hesitated because Japanese property values have fallen since it completed the acquisition of 13 hotels and two property-management units from All Nippon Airways for 281.3 billion yen, or $2.4 billion at the time, in June 2007. It was then the biggest hotel transaction in Asia, says Reuters.
Citigroup and Shinsei lent Morgan about 180 billion yen in senior debt to make the purchase, says the Journal.
GIC, the third creditor, provided mezzanine financing, a mix of debt and equity, which is next in line to get wiped out after Morgan Stanley's equity if the Singapore fund doesn't do something to protect its stake, it adds.
GIC booked losses on its $675 million investment in Stuyvesant Town/Peter Cooper Village complex, an apartment complex in Manhattan, New York, in which also it held a mix of debt and equity.
That's small potatoes, however, compared with its multibillion-dollar UBS losses.
GIC will be hit with a paper loss of about 7.85 billion Swiss francs (around $7.26 billion), converting notes into shares that would give it a 6.6 per cent stake in UBS, making it the biggest shareholder of the Swiss bank, according to the Straits Times.
GIC invested 11 billion Swiss francs in UBS, but now its UBS shares are worth just 3.15 billion Swiss francs, says the newspaper.
Meanwhile, Temasek Holdings has cut its stake in India's No.2 lender ICICI Bank to 5.9 percent from 8.3 percent, reports Reuters.
GIC's strategy could be different from that of Temasek, which has been more cautious since the financial crisis and has done very few blockbuster deals, says another Reuters report. Temasek, the smaller of the two Singapore sovereign wealth funds, has largely bought small stakes in Chinese firms, IPOs or has supported its portfolio companies, it adds.
GIC's recent investments have been diverse, ranging from the hotel industry and China property developer Longfor to a videogaming firm, says Reuters.
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