Global Banking and Capital Markets

Hong Kong Disneyland HK$3.3 bn project loan

Prof. Ingo Walter

Borrower Hong Kong International Theme Parks Limited (HKTP) - owner & operator Project Cost HK$14 Billion Infrastructure Start End-2000 Construction Start End-2002 Opening 2005 HKTP Structure - HK government 57% plus conversion rights into common for infrastructure development (up to 75% ownership if exercised) - HK$ 3.25 billion - Disney 43% - HK$2.45 billion - HK government sub-debt with repayment starting in Year 16 - HK$6.1 billion - Bank Loan - HK$2.3 billion 15-year non-recourse loan plus HK$1 billion non-recourse revolving working capital loan post-construction – HK$3.3 billion.

2 Mandate - Seeking

Disney acting on behalf of HKTP, asks 17 banks to bid and it could mandate upto 3 banks to lead the deal

Chase options: No bid Bid to win Bid to lose

3 Chase Options

No bid

1. Joint mandate (fee split)

2. Aggressive competition (especially from Bank of China and HSBC)

3. Bad track record (Eurodisney)

4. Credit Issues:

15-year maturity

No collateral other than site yet to be built

Non-subordination of management fees

Desire to use cash flows to grow the project

Market risk

Force majeure risk

5. Need for fully underwritten deal

4 Chase Options

Bid to win

1. Disney important client

2. Marquee deal for the region

3. Chase not a top-10 player in Asian project loans Exh.6a (weak spot - it is global leader). Management pressure to “buy” deal?

4. Highly profitable if sole mandate

5 Chase Options

Bid to lose

1. Save face as relationship bank but not get stuck in an unprofitable or excessively risky and excessively long-term deal

2. Ideal - get shortlisted and lose gracefully or win with sufficient compensation

3. Effort and expense involved against “soft” returns from the Disney relationship

4. Preserve of optionalilty of waiting.

Decision ¾ Bid to lose ¾ Chase shortlisted

6 League Tables

Exhibit 6a Book Manager of U.S. Syndicated Loans in 1999 (Full Credit to Book Manager) Position Arranger Name Amount Percent ($ billion) of Total 1 Chase Manhattan Bank $359.6 33.8% 2 Bank America 225.6 21.2 3 Citigroup 94.7 8.9 4 JP Morgan 58.5 5.5 5Bank One 48.9 4.6 6 Deutsche Bank AG 33.0 3.1 7 Fleet Boston 31.9 3.0 8 Credit Suisse First Boston 20.2 1.9 9 First Union 19.2 1.8 10 Bank of New York 18.1 1.7

Source: Thomson Financial Securities Data Exhibit 6b Top Arrangers of Global Project Finance Loans in 1999 Position Arranger Name Amount Number ($ millions) of Deals 1 Citigroup $7,919.9 49 2 Chase Manhattan Bank 6,087.5 39 3 Bank of America 5,793.0 36 4 Deutsche Bank AG 4,715.4 44 5 Soceite Generale SA 4,247.9 45 6 ABN AMRO Bank NV 3,905.6 47 7 Credit Suisse First Boston 3,345.9 18 8 Westdeutsche Landesbank Girozentrale 3,246.0 31 9 Credit Lyonnaise 2,891.9 43 10 Dresdner Bank AG 2,824.5 38 7 Source: Euromoney’s Project Finance, July 2000. League Tables

Exhibit 6c Top Arrangers of Asian Project Finance Loans in 1999 Position Arranger Name Amount Number ($ millions) of Deals 1 HSBC $972.7 3 2 ABN AMRO Bank NV 716.4 3 3 ANZ Banking Group Ltd. 466.3 8 4 World Bank 444.1 5 5 JBIC 363.9 2 6 Sanwa Bank Ltd. 358.1 3 7 Industrial Development Bank of India 333.0 1 8 Chang Hwa Commercial Bank Ltd. 317.7 2 9 Japan Development Bank 317.5 2 10 Citigroup Inc. 280.7 4

Source: Euromoney’s Project Finance, July 2000.

8 Selling Risk to Potential Participants

15 year maturity

No collateral other than site yet to be built

Non-subordination of management

Desire to use cash flows to grow the project

Market turbulence risk

Force majeure risk

9 Risk mitigation

Conservative project capital structure

Term loan is only 15% of total capitalization (HK government loan debt service starts only after the term loan has been repaid)

HK government commitment to the project (tourism, jobs)

Adequate debt-service covet even in the worst-case scenario

Performance competence of HK government

Performance competence of Disney

Underwriting risk facing Chase and any sub-underwriters

10 Loan Pricing

Issues - Interest spread and commitment fees to banks - Underwriting fee to borrower - Closing fees paid to banks by Chase HKTP - Pricing left to bank competition - HKTP not under shareholder pressure on WACC - Ancillary benefits to HK - 100bp +/- not too important to project economics - Flexibility in terms/ covenants more important Chase - Final target hold position HK$300 million = 10% - Underwriting risk for the rest - Time and effort - Opportunity cost - Reputation risk - Must cover fee to banks

11 Loan Pricing

Banks - Must be convinced by Chase on credit issues - Comparables (Exh. 7) show lots of liquidity and over- subscription at the time - Spread of 135-135bp seems reasonable for quasi-government deal

Fees - Total fees to HKTP – 125 bp

Sub-underwriting fees of 25 bp

Closing fees of 70 bp top to 50 bp bottom tier So sub underwriters get 95 bp

12 Selected Recent Comparable Transactions

Exhibit 7 Selected Recent Comparable Transactions

Hong Kong Quasi Sovereign Deals Regional Project Deals Other Corporate Deals Airport Authority Mass Transit Railway Hutchison Asia Container Cheung Kong Borrower of Hong Kong Corp (MTRC) Telephone Corp. Terminals Finance Co. Ltd. Industry Public Utility Public Utility Telecommunications Shipping Properties

Country Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong

Rating (S&P, Moody’s) NR A/A3 NR NR A

Guarantor ------Cheung Kong (Holdings) Ltd.

Purpose General Corporate Working Capital/ Build-out Financing Project Financing General Corporate Refinancing Facility Type Term Loan Term Loan Term Loan Term Loan Term Loan

Amount in Transaction Currency HK$6,500MM HK$3,000MM HK$4,000MM HK$3,400MM HK$2,300MM (US$ equivalent) (US$837MM) (US$386MM) (US$514MM) (US$437MM) (US$296MM)

Tenor 3-year bullet/ 5-year bullet 4-year bullet 5-year/ 7-year 10-year amortizing 5-year bullet

Undrawn Pricing (bps) 25.0 15.0 Year 1, 25.0 Thereafter 25.0 50.0 25.0

Drawn Pricing (bps) HIBOR+65.0 bps/ HIBOR+75.0 bps HIBOR+110.0 bps/ HIBOR+170.0bps/ HIBOR+58.5bps HIBOR+85.0 bps HIBOR+130.0 bps HIBOR+195.0bps

Upfront Fees (bps) (U/W) 6.0/10.0 (Club Members) 25.0 (U/W) 100/100 (Top Tier) 70.0 (Top Tier) 32.5 (Top Tier)54.0/90.0 (Top Tier)50.0/75.0

All-in p.a. to Top Tier (bps) HIBOR+85.0 bps/ HIBOR+81.2 bps HIBOR+123.9 bps/ HIBOR+177.8 bps HIBOR+65.0 bps HIBOR+105.0 bps (Club members) HIBOR+145.6 bps

Launch Date May 1999 September 1999 November 1999 September 1999 November 1999

Signed Date July 1999 September 1999 March 2000 January 2000 December 1999

Lead Arrangers Chase (books), BOC 12 banks (self arranged) Chase (books), ABN ABN, BofA, DG Bank, SG, NAB, BofA, BOC, CEF Capital, SG (books), HSBC, ABN, and (books) WestLB, Dresdner SCB

Remarks Transaction was Borrower’s self arranged Lead Arrangers raised Sponsors are New World Fully underwritten by coordinating oversubscribed and club deal includes ABN, over HK$12,000MM for Infrastructure Ltd., Hong Kong arrangers. The transaction is increased from HK$4,000. BOTM, Chase, DKB, Fuji, this non-recourse build Land Holdings Ltd., Sing Hung oversubscribed and increased from Borrower is owned by the HSBC, BOC, BNP, Citi, DG, out financing. Borrower is Kai Properties Ltd., and Sea- HK$2 bn to HK$2.3 bn. Borrower is HK government and was Hang Seng and SCB. owned by Hutchison Land Orient Terminals Ltd. Li Ka Shing’s property holding set up to build, operate and Borrower operates the Whapoa, Motorola and Transaction will finance company. maintain HK’s new Chek territory’s mass railway NTT Mobile Borrowers’ 41% share in Lap Kok airport system. MRTC is wholly Communications (NTT Do construction of container owned by the HK Co Mo). Terminal 9 in Tsing Yi, Hong government. Kong.

Source: Loan Pricing Corporation 13 Commitment Letter

Problem with changing condition, given the 15-year term: Material Adverse Change Clause - Underwriter can withdraw commitment Market Flex Clause - Chase can alter terms during underwriting period (4+ weeks) - Converts underwriting into best-efforts deal? - Definition of material adverse change - Volatility of HK markets (Exh 1 & 2) - Hedging risk in market not easy due to uncertain drawdown - Flex provision common in other (albeit less volatile) markets - Rarely invoked, even during the Asia crises - Probably would only be used to tweak the terms Would Disney accept the imbedding market flex in pricing? - Overpayment and over-subscription - Leaving door open for renegotiation 14 Syndication Strategy

Size of Chase take and hold?

Larger shows greater commitment

Lower fee-to-booking ratio

Capital-intensity of loans

Distributor of loan products to client banks

Policy is to hold 10% on loans it syndicates

General Syndication vs. sub-underwriting?

Sub-underwriting = wholesale

General syndication = retail

Share risk and fee (Exch. TN-1)

Difficult deal → sub-underwriting

Client concern about its relationship banks → sub-underwriting

League table standing of banks → sub-underwriting

15 Impact of different syndication strategies

Exhibit TN-1 Impact of Different Syndication Strategies

Hold Syndication Strategy Amounts #1 #2 #3 #4 #5 #6 (HK$ mn) (Ex 8a) (Ex. 8b) (Ex. 8c) Chase Mandate Sole Joint Sole Sole Sole Joint Sub-Underwriting YesNoNoNoNoYes Number of Banks Chase $300 111111 Coordinating Arrangers $300 020002 (other Mandated Banks) Lead Arrangers $300 400003 (Sub-underwriters) Arrangers $250 4 4 4 12 0 4 Co-Arrangers $150 468002 Lead Manager $100 2580302 Total # of banks 15 18 21 13 31 14 Chase Fees in US$000a $1,776 $1,126 $2,995 $2,596 $3,365 $884 Chase Max. Exposure (HK$mn) $3,300 $1,100 $3,300 $3,300 $3,300 $1,100 Chase Exposure in the General Syndication HK$ in millions $660 $1,100 $3,300 $3,300 $3,300 $550 US$ in million $85 $141 $423 $423 $423 $71 Chase Fees/ Chase Gen. Synd. Exposure 0.021 0.008 0.007 0.006 0.008 0.013 # Banks Needed to control 60% 7 8 10 8 18 7

a Assuming an underwriting fee of 1.25%, sub-underwriting fee of 25bp (where applicable), top-tier closing fees of 70 bp, and a final hold position for Chase of HK$300 million.

16 Which Banks to Invite?

Administrative simplicity Î smaller syndicate

Deterrence of default Î larger syndicate

Syndicate size and credit risk Î FROWN

Local banks give comfort to foreign banks

Nationality and political risk

Appetite for HK$ exposure

17 Denouement

Early September 2000 Chase invited 7 banks to submit $HK600mm sub-underwriting commitment in return for 25bp sub-underwriting fees 2 from Disney shortlist 3 Disney relationship banks HSBC Six accepted within 2 weeks Commitment scaled-back from HK$600mm to HK$471mm apiece (6+chase = 7 banks x HK471mm = HK$3.3 billion) th General syndication launched on October 11 with invitations to 67 banks and response deadline of October 25th Total requirement HK$ 3,300 mm Sub underwriters HK$ 2,100 mm (7 x HK$300mm hold) Remaining need HK$ 1,200 mm 25 banks committed to HK$5.3 billion 4.4x oversubscribed 16 banks from Hong Kong and China 18 banks wanted to be Arrangers to earn 70bp vs. 50 bp

18 General syndication

Exhibit 1 General Syndication Feedback as of October 27, 2000 Bank Bank Nationality Remarks (Date) Committed Amount Lead Arrangers/ Sub-Underwriters (25bps) 1 BNP Paribas France $600 2 Bank of China (BOCI) Capital China 600 3 Chase Manhattan Bank USA 600 4Credit Agricole Indosuez France 600 5 Fuji Bank Japan 600 6 HSBC Investment Bank UK/ Hong Kong 600 7 Standard Chartered Bank UK/ Hong Kong 600 Sub-Total from Lead Arranger Banks $4,200

Arrangers (70bps) 1 Abbey National Treasury Services plc U.K. Committed (10/23) 250 2 Agricultural Bank of China China Committed (10/19) 250 3 Banca Nazionale del Lavoro Italy Committed (10/20) 250 4 Bank of Communications China Committed (10/25) 250 5 Bank of East Asia Hong Kong Committed (10/25) 250 6 Bank of Tokyo-Mitsubishi Japan Committed (10/24) 250 7 Bayerische Landesbank Germany Committed (10/25) 250 8 Chekiang First Bank Hong Kong Committed (10/25) 250 9 China Construction Bank China Committed (10/24) 250 10 DG Bank Germany Committed (10/25) 250 11 Hang Seng Bank Hong Kong Committed (10/20) 250 12 ICBC Asia China Committed (10/24) 250 13 Industrial and Commercial Bank of China China Committed (10/19) 250 14 Keppel Tat Lee Bank Limited, Hong Kong Singapore Committed (10/24) 250 15 Overseas Union Bank Singapore Committed (10/24) 250 16 Shangai Commercial Bank Ltd. Hong Kong Committed (10/25) 250 17 Wing Hang Bank Hong Kong Committed (10/20) 250 18 Wing Lung Bank Ltd. Hong Kong Committed (10/25) 250 Co-Arrangers (60bps) 19 Asia Commercial Bank Hong Kong Committed (10/20) 150 20 Bank Austria Creditanstalt Austria Committed (10/24) 150 21 Sanwa Bank Japan Committed (10/25) 150 Lead Managers (50bps) 22 Dah Sing Bank Hong Kong Committed (10/24) 100 23 International Bank of Asia Hong Kong Committed (10/24) 100 24 ITIC Ka Wah Bank Hong Kong Committed (10/25) 75 25 Liu Chong Hing Bank Hong Kong Committed (10/24) 75 Sub-Total From Syndicate Banks $5,300 Total Commitment from All Banks $9.500 19 Source: Internal company documents Over-subscription

How to deal with over-subscription HK5.3 commitment Î HK$ 12. billion need?

First come, first served Cut all banks back to lowers tier (Manager) Scale all banks back by same percentage Scale back of all including sub-underwriters Criteria

Fairness

Consistency

Client considerations

Everyone ought to make at least US$500,000 in fees (Exhibit TN-A)

20 Result

Aggressive scalebacks from 30% to 63% (Exhibit TN-2)

Lead arrangers/ underwriters (7) HK$3.3 billion Î HK$ 910mm

Arrangers (18) HK$ 5,000mm Î HK$ 1,890mm

Co-arrangers (3) HK$ 450mm Î HK$ 255mm

Lead managers (4) HK$ 350 mm Î HK$ 245mm

Total (32) HK$ 9,600 bln Î HK$ 3,300mm

21 Credit facility allocations

Exhibit TN-2 HK$3.3 Billion Senior Secured Credit Facility Allocations

Term Loan Revolving Credit Term Loan Revolving Credit Committed Committed Allocation Facility Allocation Amounts (HK$) Amounts (HK$) % Scaled Back

Lead Arrangers/ Underwriters $ 3 28,571,428.6 $ 142,857,142.9 72.4% 72.5% $ 90,687,500 $ 39,312,500 1 Bank of China, Hong Kong Branch 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 2 BNP Paribas 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 3 The Chase Manhattan Bank 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 4 Credit Agricole Indosuez 328,571,428.6 142,857,142.9 72.4% 72.5% 90, 687,500 39 ,312,500 5 The Fuji Bank Limited 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 6 The Hongkong and Shanghai Banking Corporation Limited 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 7 Standard Chartered Bank 328,571,428.6 142,857,142.9 72.4% 72.5% 90,687,500 39 ,312,500 Sub Total 2,300,000,000 1,000,000,000 Average: 72.4% 634,812,500 275,187,500

Arrangers 1 Abbey National Treasury Services plc 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 2 The Agricultural Bank of China, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 3 Banca Nazionale del Lavoro S.p.A., Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 4 Bank of Comuunicaitons, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 5 The Bank of East Asia, Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 6 Bayerische Landesbank Girozentrate, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 7 Chekiang First Bank Ltd. 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 8 China Construction Bank, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 9 DG Bank Deutsche Gennossenschaftsbank AG, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 10 Hang Seng Bank Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 11 The Industrial and Commercial Bank of China, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 12 The Industrial and Commercial Bank of China (Asia) Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 13 Keppel TaLee Bank Limited, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 14 Overseas Unione Bank Limited, Hong Kong Branch 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 15 Shanghai Commercial Bank Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 16 Tokyo-Mitsubishi International (HK) Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 17 Wing Hing Bank, Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 18 Wing Lung Bank Limited 174,242,424.2 75, 757,575.8 58.0% 58.0% 73,187,500 31 ,812,500 Sub Total 3,136,363,636 1,363,636,364 Average: 58.0% 1,317,375,000 572,625,000

Co-Arranger 1 Asia Commercial Bank Ltd. 104,545,454.5 45, 454,545.5 43.4% 43.2% 59,187,500 25 ,812,500 2 Bank Austria Creditanstalt International AG, Hong Kong 104,545,454.5 45, 454,545.5 43.4% 43.2% 59,187,500 25 ,812,500 3 The Sanwa Bank, Limited 104,545,454.5 45, 454,545.5 43.4% 43.2% 59,187,500 25 ,812,500 Sub Total 313,636,364 136, 363,637 Average: 43.3% 177,562,500 77 ,437,500

Lead Manager 1 Dah Sing Bank, Limited 69,696,969.7 30, 303,030.3 30.1% 29.7% 48,687,500 21 ,312,500 2 International Bank of Asia Limited 69,696,969.7 30, 303,030.3 30.1% 29.7% 48,687,500 21 ,312,500 3 CITIC Ka Wah Bank 52,272,727.3 22, 727,272.7 30.3% 29.3% 36,437,500 16 ,062,500 4 Liu Chong Hing Bank Limited 52,272,727.3 22, 727,272.7 30.3% 29.3% 36,437,500 16 ,062,500 Sub Total 243,939,394 106, 060,606 Average: 29.9% 170,250,000 74 ,750,000

32 TOTAL 5,993,939,393 2,606,060,607 2,300,000,000 1,000,000,000

Commitment from Lead Arrangers 4,200,000,000 Commitment from General Syndicate 5,420,000,000 Total Commitment for HKDL Transaction 9,620,000,000

Oversupscription 191% 22 Estimated Compensation for the Transaction

Loan Am ou nt ($H K m illio ns)= $3,300 M andate= Sole Underwriting Fe e= 1.25% assumed fee Sub-Unde rwriting= Yes Sub-Unde rwrting Fee= 0.25% $HK /$US Exchange Rate= 7.8 Top-Tier (Arranger) Fee= 0.70% Total Underwriting Fees ($HK millions)= $41.25

Sub Initia l Underw ritin g Underw ritin g G eneral Syndication Commitment Total I nvitation Total Percent Final Total Alloca tion Amount Commitment Alloca tion Amount Commitment Sca led Alloca tion Alloca tion per Bank # of Ban ks (HK$MM) (H K$MM) (H K$MM) (H K$MM ) (H K$MM) Back (H K$ MM ) (H K$MM) (U S$MM) Chase 1 $3,300 $3,300 $471 $471 72.4% $130.0 $130. 0 $16. 7 # Other Mandated Banks 0 $0 $0 $0 $0 0.0% $0.0 $0.0 $0.0 Lead Arrangers (Sub UW) 6 $2,829 $2,829 72.4% $130.0 $780. 0 $16. 7 Arrangers 18 $250 $4,500 58.0% $105.0 $1,890. 0 $13. 5 Co-Arrangers 3 $150 $450 43.3% $85.0 $255. 0 $10. 9 Lead Manager @HK$100 2 $100 $200 30.0% $70.0 $140. 0 $9.0 Lead Manager @HK$75 2 $75 $150 30.0% $52.5 $105. 0 $6.7 32 $3,300 $3,300 $8,600 $3,300. 0

Per Bank Income ( HK$000) Un der writing Clos ing Underwriting Sub-U/W Clos ing Pool T ota l P er B ank T otal for All B anks Fees Fees Spread Spread Fee Income Income (HK$000) (US$000) (HK$000) (US$000) Chase 0.30% 0.70% $9,900 $1,179 $910 $106 $12, 095 $1,550.6 $12, 095 $1,551 # Other Mandated Banks $0 $0 $0 $0 $0 $0.0 $0 $0 Lead Arrangers (Sub UW) 0.25% 0.70% $1,179 $910 $106 $2,195 $281.4 $13, 170 $1,688 Arrangers 0.70% $735 $735 $94.2 $13, 230 $1,696 Co-Arrangers 0.60% $510 $510 $65.4 $1,530 $196 Lead Manager @HK$100 0.50% $350 $350 $44.9 $700 $90 Lead Manager @HK$75 0.50% $263 $263 $33.7 $525 $67 Tota l Fees $41, 250 $5,288 General Closing Total Syndica tion Final Fees Closing Fees Closing Alloca tion per Bank All Banks Calculation of Pool Incom e Fees (HK$MM) (HK$000) (HK$000)

Total Closing Fee Income Available 0.70% $3,300 $23, 100 Tota l Ch ase Tota l Closing Fee Income Paya ble Unde rw riting Fee Chase 0.70% $130. 0 $910 $910 Fee (US$000) Other Mandated Banks $0 $0 Lead Arrangers (Sub UW) 0.70% $130. 0 $910 $5,461 1.00% $493 Arrangers 0.70% $105. 0 $735 $13, 230 1.10% $916 Co-Arrangers 0.60% $85. 0 $510 $1,530 1.20% $1,339 Lead Managers @ HK$10 0 0.50% $70. 0 $350 $700 1.30% $1,762 Lead Managers @ HK$75 0.50% $52. 5 $263 $525 1.40% $2,185 $22, 356 1.50% $2,608 23 Success?

Favorable: Massive oversubscription is a vote of confidence in the project Deal closed in a timely way within parameters satisfactory to Disney Broad bank participation No bank who wanted to participate was excluded Chase had sole mandate on this marquee deal – one of the most important since the Asian Crisis that started in 1997 Chase and other underwriters earned very attractive fees (Exhibit TN-3) Chase - HK$ 12,095,000 (1.25% underwriting fee minus 0.95% paid to sub-underwriters) Others – HK$ 2,193,500 each Delighted – CA Indosuez, BNP and Standard Chartered (not shortlisted, no more work than smallest syndicate banks but got much higher compensation)

24 Success?

Not so favorable: Heavy over-subscription indicates overpricing By Disney? By Chase? Sub-underwriting was probably unnecessary Chase could have kept more of the fees (chose not to in order maintain relations with banks) Did not meet fairness and minimum fee criteria That 20 out of 32 final banks were from HK or China suggests political pressure

Closing: Loan agreement signed on November 25, 2000. Fees paid Financial closing date (draw-downs possible) on 31 March 2001.