An infrastructure asset developer is planning to build a 2 x 250 megawatt (MW) coal- fired electric power plant in an Asian country. Estimated investment cost is about USD (U.S. Dollar) 500 million. The Chief Financial Controller of the developer has been negotiating with several bank groups to raise USD 350 million project financing. One leading project finance bank submits bid to raise the syndicated project finance loan.

(a) The project finance bankproposestosolelyand fullyunderwrite thefull amountoftheprojectfinance loanwiththefollowingsyndication strategy (Syndication strategy1).

The syndication stages are as follows:

1. The soleprojectfinance ("LeadArranger") underwrites the entireamountofprojectfinanceloan

2. TheLeadArranger invitesandcontracts withthree(3)sub-underwriters(Co-LeadArrangers)to commit USD87.5 millioneach

3. Thisisfollowedby general syndicationwhich bringsin afurther six(6)participatingbanks(Managers)tojoin the transaction,eachcommitting USD35 million.

4. Oncompletionofthe syndication, the final-takecommitmentofthe LeadArrangerandthe Co-Lead Arrangerswill bereducedtoUSD35million each.

TheLeadArrangers determinethat for its solefully underwrittenbid,itwilltakeapraecipiumof 5 bpflat (on thefull projectfinance amount) from thearrangementfee. TheLeadArrangerandthe Co-Lead-Arrangerswill eachreceive45 bpflaton the underwrittenamount. Each manager will receive25 bpflatfortheparticipation amount.

(note : bp means basis point. Each bp is equal to 0.01%)

(i) Computethe fee payable to each groupof LeadArranger,the Co-LeadArrangersandthe Managersandthe total arrangementfee payable to the lenders inSyndication Strategy1.

Theprojectfinance bankproposes another syndication strategy(Syndication Strategy2)to formamulti-bank biddinggroup to reduceunderwritingrisk. Thesyndicationstages areasfollows:

1. Thesoleprojectfinancebank("LeadArranger")invitesandcontractswiththree

(3) sub-underwriters (Co-Lead Arrangers) to commit USD 87.5 million each.

2. This isfollowed by general syndicationwhichbringsinafurthertwentysix(26)participatingbanks joiningthetransaction.

3. Oncompletionofthe syndication,the final-takecommitmentofeach lender are asfollows

Banks	Number	Participation Commitment per bank (USD million)	Total (USD million)
Lead Arranger and Co-Lead Arrangers	4	20	80
Lead Manager	6	20	120
Manager	10	10	100
Co-Manager	10	5	50
Total			350

TheLead ArrangerandCo-LeadArrangers determine that theywill take30 bpflat ontheir underwriting amountswithout any oneofthem takingapraecipium.Theparticipationgroupinginthe generalsyndicationwill beUSD20million,USD10millionandUSD5million.Theparticipationfee onthesecommitmentswillbe 45 bpflat,35 bpflatand 25 bpflatrespectively.

Inaddition,thesyndicationfee pool is tobesharedequallybythefour (4)LeadArrangerand Co-LeadArrangers. Syndicationfeepoolisthedifferencein aggregatefeepayable under Syndication Strategy1andSyndication Strategy 2.(note: bpmeans basispoint.Eachbpis equalto0.01%)

(ii) Computethe feepayabletoeach groupof LeadArranger, the Co-Lead Arrangersandthe Managersandthe total arrangementfee payable to the lenders inSyndication Strategy2.