Oct. 1 (Bloomberg) -- Borse Dubai agreed to loans from HSBC Holdings Plc to help its bid for at least $6.5 billion of shares in OMX AB and London Stock Exchange Group Ltd.
State-run Borse Dubai will determine how much to borrow after Swedish regulators decide on its OMX takeover offer, Chief Executive Officer Per Larsson said in an interview today, declining to specify an amount. HSBC will lend Dubai as much as $5.7 billion, said three people with direct knowledge of the deal, who wouldn't be identified as the agreement is private.
Borse Dubai and Nasdaq Stock Market Inc., which had been rivals for control of Nordic exchange OMX, agreed last month that Dubai would proceed with its bid and then hand the shares to Nasdaq. In return, Nasdaq would give almost 20 percent of its stock to Borse Dubai and sell it a 28 percent holding in the London Stock Exchange for about $1.6 billion.
``We have secured all the financing we need for the transactions from HSBC,'' Larsson said.
Borse Dubai owns or has agreements to buy a combined 47.6 percent of OMX, and is in talks with other shareholders to raise its stake above the 50 percent threshold needed to clinch a takeover, he said.
The Swedish Financial Supervisory Authority last week ruled that Nasdaq is a ``fit and proper'' owner for OMX, boosting the chances of Dubai and the U.S. exchange completing their deal.
Qatar Stake
HSBC's loans may help Dubai fend off counter bids for OMX as the Persian Gulf emirate vies with neighboring Qatar for shares in the Stockholm-based company.
State-run Qatar Investment Authority issued a statement urging OMX shareholders to ``take no action'' after Dubai and Nasdaq announced their agreement on Sept. 20. Qatar later that day said it bought 9.98 percent of OMX and 20 percent of the London Stock Exchange as part of a plan to ``take supportive holdings'' in European bourses.
Dubai countered on Sept. 26, announcing agreements to buy OMX shares at 265 kronor from a group including Investor AB, Nordea Bank AB and exchange founder Olof Stenhammar. Those deals lapse if a rival bids at least 303 kronor a share, and Dubai fails to match the new bidder within 15 banking days.
Mega-Loans
HSBC is among banks including Royal Bank of Scotland Group Plc, Deutsche Bank AG and Citigroup Inc. that are helping Dubai state companies borrow internationally.
``Debt markets have recovered a bit in the last two to three weeks, and banks are showing more appetite for lending to companies in emerging markets where they can see growth,'' said Sven Kreitmair, co-head of corporate credit research at UniCredit SpA in Munich. ``There aren't many mega-loan transactions in the market, but the banks need them to meet their annual targets,''
Dubai World, the state-run group that in August agreed to invest as much as $5.1 billion in Las Vegas casino company MGM Mirage, is seeking a $2.7 billion one-year loan from Royal Bank of Scotland, Deutsche Bank and Credit Suisse Group, a banker with direct knowledge of the deal said last month.
Container port operator DP World hired Deutsche Bank, Royal Bank of Scotland, Barclays Capital and Citigroup for a $2.5 billion five-year borrowing, the banker said.
Dubai World's loan will pay interest of 85 basis points more than the London interbank offered rate, rising to 110 basis points after six months. DP World's will pay 65 basis points over Libor before switching to a rate based on its credit ratings. A basis point is 0.01 percentage point.
Nasdaq got $2 billion of loans and a revolving credit from Bank of America Corp. and JPMorgan Chase & Co. to help pay for the OMX shares it will buy from Borse Dubai. Nasdaq has to purchase the OMX shares from Dubai by April for the deal to complete, according to a Sept. 20 filing.
OMX shares fell 1.4 percent to 275.5 kronor at 5:09 p.m. in Stockholm, valuing the company at 33.4 billion kronor. The shares have more than doubled this year.
Tim Harrison, spokesman for HSBC's investment bank in Dubai, declined to comment on Borse Dubai's financing.
