Latham & Watkins is advising HKBN Ltd. on its entry into a Merger Agreement with MBK Partners and TPG (who jointly own 100% of WTT), pursuant to which HKBN through its wholly owned subsidiary has agreed to conditionally purchase all of WTT's shares in exchange for issuing a combination of HKBN shares and Vendor Loan Notes to MBK Partners and TPG. The transaction values WTT at HKD10.5 billion.
The merger with WTT, the only enterprise-focused fixed telecommunication services operator with extensive fixed line infrastructure in Hong Kong, will enhance service capabilities, diversify business portfolio, and improve the quality of service offerings to enterprise customers through increased footprint and capacity. WTT and HKBN's enterprise solution businesses are highly complementary given WTT's focus on larger corporate clients and HKBN's focus on SME clients. The transaction also provides for significant value creation opportunities through synergies of combined cost efficiencies and cross-selling opportunities to the enlarged customer base.
Upon closing of the transaction, each of MBK Partners and TPG will own approximately 11.66% of HKBN. In addition, each of MBK Partners and TPG shall hold a Vendor Loan Note valued at HKD970 million. The Vendor Loan Note is a non-voting, nil-coupon perpetual instrument, convertible into HKBN shares under certain conditions. As part of the transaction, HKBN will assume the existing debt and cash of WTT.
The transaction, expected to close by 1Q 2019, is subject to the approval of HKBN shareholders, regulatory approval and satisfaction of other conditions precedent.
Simon Cooke, Hong Kong M&A partner and Global Co-Chair of the firm's Private Equity Practice, commented: "We are delighted to have advised on this significant transaction, which showcases the firm's ability to execute complex M&A transactions, whilst leveraging our expertise in the Hong Kong listed companies regulatory regime, to the benefit of our valued client, HKBN."
Hong Kong partner Terris Tang added: "We are pleased to partner once again with our long-standing client HKBN. This strategically important transaction represents a key milestone in the company's continued success story, in which we are proud to play a part."
The Latham team was led by Hong Kong partner Simon Cooke, with Hong Kong partner Terris Tang and Hong Kong associates Maurice Conway, Bing Xi Sia and Yingshi Pan.
Latham & Watkins has previously advised HKBN, among other things, on its acquisition of New World Telecom in 2016 and also worked on its Hong Kong IPO in 2015.
