DBS And Standard Chartered Lead LBO For SingTel Yellow Pages

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S$220m divestment of Singapore's leading phone directory publisher

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Landmark Syndicated Loan Oversubscribed Bt More Than 80%

SINGAPORE, SEPTEMBER 1, 2003 - DBS Bank and Standard Chartered Bank announced today they have completed one of the biggest leveraged buy-outs (LBO) in South-East Asia involving the $220 million sale of SingTel's Yellow Pages to two private equity firms.

In the deal which is expected to trail blaze other LBOs in Singapore, CVC Asia Pacific and J.P. Morgan Partners Asia LDC injected a combined $95 million in cash equity. Eleven banks, including lead arrangers DBS and Standard Chartered, subscribed to a six-year $150 million syndicated facility.

The deal was signed this morning in Singapore.

A LBO is a takeover of a company or a controlling interest in a company using a significant amount of borrowed money, usually more than 50 per cent of the total purchase price.

The sale followed a strategic review by SingTel to sell non-core assets and to focus on its core telecommunications services business.

SingTel Yellow Pages, founded in 1967, is the leading telephone directory business in Singapore with a market share of 87 per cent. Its yellow directories with their well-known 'walking fingers' trademark have a circulation of over three million and are delivered to 900,000 households and 120,000 businesses in Singapore.

Proceeds from the syndicated loan will be used to partially fund the acquisition from SingTel and to provide working capital for Yellow Pages. The six-year facility consists of a S$140 million term loan and a S$10 million revolving credit facility, with the latter going towards servicing working capital needs after the acquisition.

Peter Chan, Managing Director and Head of Syndicated Finance at DBS Bank said: "Buy-out funds are currently very active in North Asia, starting in Hong Kong and Korea in the late 1990s, and more recently, in Japan. We expect to see more such funds taking an interest in Singapore and the rest of South East Asia, a region where the LBO market is just hotting up."

Chan added that two factors are helping to fuel the LBO market in the region: a trend among large corporations to shed non-core assets and the prevailing low interest rate environment which makes debt funding an attractive proposition for investors.

"This deal is one the biggest of its kind for this part of Asia, and the first co-led by DBS. The syndication was extremely well-received. At the close of the syndication, the term loan was oversubscribed by over 80%," he said.

"Over the last few years, North Asia has enjoyed a higher investment flow due to the perceived better economic outlook of North Asia over South. LBOs too have been more active in North Asia over South for the same reasons. However, lately, corporates realised investments in Southeast Asia yield surprisingly good returns. As a result, we have seen more selective investments in South Asia resulting in increased investments, such as Indostat, Telkomsel, and BCA. LBOs are expected to follow suit," said Mr Pat Waranimman, Managing Director & Head of Syndications - S.E. Asia from Standard Chartered.

"Standard Chartered has been in Asian LBO transactions when the market kick-started some years ago. It's great to see LBO deals also kick-start in South Asia. Yellow Pages represents a good business for LBO financing - long history of operations, stable profitability and cash flow with high predictability. Combined with the strong investment experience of the Sponsors, CVC and JP Morgan, in this type of business, the transaction provides good credit comfort for lenders," said Mr Raymond Wong, Director, Syndications N.E.A, Standard Chartered.

In addition to DBS and Standard Chartered, nine other banks from Singapore, Malaysia, Japan and Europe joined the syndicate. They are OCBC, UOB, Maybank, Sumitomo Mitsui Banking Corporation, Mizuho, CIC, HVB, NordLB and WestLB.

About DBS

Headquartered in Singapore, DBS Bank is one of the largest financial services groups in Asia. The largest bank in Singapore and the fourth biggest banking group in Hong Kong as measured by assets, DBS has dominant positions in consumer banking, treasury and markets, securities brokerage, equity and debt fund raising. Beyond the anchor markets of Singapore and Hong Kong, DBS serves corporate, institutional and retail customers through its operations in Thailand, The Philippines, and Indonesia. In China, the bank has branches and representative offices in Shanghai, Beijing, Shenzhen, Fuzhou and Tianjin. The Bank's credit ratings are among the highest in the Asia-Pacific region. More information about DBS Group Holdings and DBS Bank can be obtained from our website www.dbs.com.