In this case analysis, I will first show the company's requirements for financing. Next, I will provide an analysis of the key pros and cons for Chase under the deal. Finally, I will show how these two factors affected the price as well as the execution of the trade. In order to build the new Disneyland in Hong Kong, a new non-recourse entity, Hong KongInternational Theme Parks Ltd (HKITP), was created. While the owners supported the project with substantial amounts of equity (Disney and government) as well as subordinate debt (government), Disney had significant requirements for the financing portion of the remaining amount needed. Disney was seeking bank financing for this new entity of HKD 2.3 billion in the form of a deferred draw term loan (“DDTL”) plus a working capital line of HKD 1.0 billion ( “Revolving Credit Facility” or “RCL”). Although they had learned from their most recent experience with Disneyland in Paris not to implement an overly aggressive capital structure, they nevertheless required significant flexibility with regard to the following terms and conditions: - A deferred amortization structure of 15 years which would start as late as 3 years after the opening of the park, i.e. 8 years after loan closing and 6 years after loan financing - CAPEX allowed for further expansion (instead of using FCF for 'depreciation) - full underwriting of the transaction up to 3 Lead Arrangers - no subordination of management and royalties - the main collateral of the transaction (the land) would only gradually become available when the government was first to recover the land. Not only did Disney remain conservative when it came to overall capital structure (see Exhibit 5 just in case), but they also chose to go public in 2000 in order to ensure access to funds at competitive prices. attractive despite the payment of commitment fees during the first two years when the DDTL was not drawn. From Chase's point of view, this possible transaction was interesting for the following reasons. First of all, becoming one of the main arrangers of a syndicated loan always represents a revenue opportunity for the bank. Furthermore, the new entity had a strong capital structure with 40% equity and also 43.3% subordinated debt provided by the government. This meant that new bank debt would be the largest piece and would only represent 16.7% of the capital structure. Thus, the credit risk for any credit commitment was not too high (at least compared to other project finance transactions). Another important factor was that one of the owners