Lee & Man Paper secures HK$2.5bln five-year term loan facility

The facility aims to further strengthen the group’s financial position for business expansion.

Lee & Man Paper Manufacturing Limited (“Lee & Man Paper” or the “Group”) (stock code: 2314), the second largest containerboard manufacturer in China, announced today that its wholly-owned subsidiary has signed a HK$2.5 billion five-year term loan facility (the “Facility”) with a group of five banks.

The Hongkong and Shanghai Banking Corporation Limited is the coordinator, agent and lender together with Hang Seng Bank Limited, Mizuho Corporate Bank, Ltd., Hong Kong Branch, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Banking Corporation as the lenders. The funds will be used for refinancing of the Group’s existing facilities, general working capital requirements and capital expenditure, according to a Lee & Man Paper report.

Mr. Raymond Lee, Chief Executive Officer of Lee & Man Paper, said, “We are glad to have received excellent support from the banks, demonstrating Lee & Man Paper’s sound financial strengths and outstanding credibility in the market. The Facility is expected to strengthen our financial position and be beneficial to the Group’s expansion plans on stream which will boost our production capacity by more than 50% to close to 7 million tonnes annually by mid-2012.”

The Group’s capital expenditure in the coming two years will be HK$2,100 million for FY2011 and HK$2,300 million for FY2012 respectively. Net gearing ratio is expected to remain at a healthy level after taking the Facility into account.