NOL aggressive in demands for Hapag-Lloyd loan-source

By Saeed Azhar and Koh Gui Qing

SINGAPORE, July 15 (Reuters) - Neptune Orient Lines (NEPS.SI: Quote, Profile, Research), undaunted by the global credit crunch, is seeking bold terms for a loan of up to $7 billion to finance a takeover bid for Germany's Hapag-Lloyd, banking sources said on Tuesday.

NOL is seeking a "covenant-lite" two-year loan, with an indicative price of 150 basis points above London Interbank Offered rate, sources said. The premium over LIBOR includes fees and margins.

The covenant-lite loan looks like a traditional syndicated loan, but does not carry the legal clauses that allow investors to track the performance of a borrower or declare a default if financial measures are breached.

"It is a borrower's term sheet," a banker, who has seen the term sheet, told Reuters, adding the terms were aggressive in current market conditions, where the year-long credit crisis has significantly raised the cost of borrowing globally.

According to Reuters Basis Point, Hong Kong-based PCCW (0008.HK: Quote, Profile, Research), which is controlled by billionaire Richard Li, is looking to raise $3 billion at 170 basis points above LIBOR to refinance existing debt.

The time period of the NOL loan was not clear, but typically such loans are made at three-month Libor plus a premium.

Bankers believe the backing of a Singapore sovereign wealth fund may help NOL secure better terms.

NOL is 66-percent owned by Temasek Holdings [TEM.UL], which is rated AAA by rating agency Standard & Poor's. NOL declined to comment on the deal.