Bank of China provides a $10 billion USD term loan to Global Chem Investment to finance its subscription of $10 billion USD of perpetual bonds supporting ChemChina's acquisition of Syngenta AG (Linked to Record ID#100830, #100831, #100832, #100833, #100940, #100970, and #100971)

Project narrative

On February 2, 2016, Chinese state-owned chemical company China National Chemical Corporation (ChemChina) and its wholly owned subsidiary China National Agrochemical Corporation (CNAC) entered into an agreement with Swiss agribusiness conglomerate and pesticide and seeds producer Syngenta AG to purchase it for a consideration of for $465 USD per share in cash, $43 billion USD total, plus a special dividend of fr.5 CHF ($5.02 USD) to be paid prior to closing. On March 8, 2016, China CITIC Bank Corporation Limited entered into a senior secured $30,000,000,000 USD bridge term loan facility agreement with CNAC Century (HK) Company Limited — a Hong Kong-incorporated special purpose vehicle (SPV) wholly owned by Hong Kong-incorporated holding company CNAC (HK) Investment Company Limited, itself wholly owned by Hong Kong-incorporated holding company CNAC (HK) Holdings Company Limited, a wholly owned subsidiary of CNAC — to finance its acquisition of Swiss agribusiness conglomerate Syngenta AG. The proceeds were to be used by the borrower to finance amounts payable to holders of Syngenta's shares and financing the costs, fees, and expenses incurred with the acquisition; the borrower was authorized to advance any amount drawn to any of its subsidiaries for these purposes. China CITIC Bank provided this loan to underwrite debt for the transaction. This loan carried a maturity period of seven years (84 months), with a three year-extension option at the borrower's request and lender's consent if no default has occurred. The borrower was required to repay 5% of the borrowings in semi-annual instalments commencing 30 months after the agreement (i.e. September 2018) (a grace period of 2.5 years), until 78 months after the agreement, when the borrower was required to repay 30% of the borrowings, and then again 84 months after the agreement, when the borrower was required to repay the remaining 30% of the borrowings. This loan carried an interest rate of LIBOR plus a margin of 300 basis points (bps) per annum, to be increased to 500 bps per annum if the facility was not repaid within its original seven year maturity, and a three-month interest period for each borrowing. The loan carried an availability period that was the earliest of the offer expiry date for the acquisition, the squeeze out closing date for the acquisition, or 24 months after the agreement. The borrower was required to pay a fee computed daily at 0.6% per annum on the undrawn amount of the commitment for the duration of the availability period, payable on the last day of each successive period of three months which ends the availability period. The borrower was also required to pay the lender an arrangement fee and agency fee. The borrower was also required to prepay outstanding amounts upon the occurrence of a change of control of ChemChina and to prepay the principal under the loan with proceeds from issuances of additional equity interests, disposals of shares in Syngenta and debt issuances. This loan was secured by (i.e. collateralized against) a charge over all shares in CNAC (HK) Holdings Company Limited as granted by CNAC under Hong Kong law, a charge over all shares in CNAC (HK) Investment Company Limited as granted by CNAC (HK) Holdings Company Limited under Hong Kong law, a charge over all shares in CNAC Century (HK) Company Limited as granted by CNAC (HK) Investment Company Limited under Hong Kong law, and a charge over all shares in Hong Kong-incorporated holding company CNAC Saturn (HK) Company Limited as granted by CNAC Century (HK) Company Limited under Hong Kong law. China National Chemical Corporation (ChemChina) and CNAC issued guarantees for this facility. Then, on August 25, 2016, a syndicate of 12 banks — including China CITIC Bank International Limited, the Beijing Branch of China CITIC Bank Corporation Limited, and the Hong Kong Branch and the Shanghai Pilot Free Trade Zone Branch of Shanghai Pudong Development Bank Co., Ltd. (SPDB) — entered into a $12,700,000,000 USD syndicated HoldCo Facilities Agreement with CNAC Century (HK) Company Limited to facilitate the acquisition of Syngenta. This facilities agreement consisted of two facilities: a $12,500,000,000 USD term facility and a $200,000,000 USD revolving facility. The use of the proceeds of the term facility was the financing of the share settlement payments and acquisition costs for Syngenta and the use of the revolving facility were to pay interest accrued under the facilities agreement, to fund payments into the interest reserve account such that it had a balance no less than the applicable interest reserve amount, and to fund reasonable operating and administration costs of the borrower. This loan carried an interest rate of LIBOR plus a margin, the margin being based on the long-term credit rating assigned to ChemChina by Moody's, S&P, and Fitch, ranging from 2.00% to 7.75% (a complete breakdown of the possible margin scores is available on page 28 of the full loan contract); at time of the close of transaction, the opening margin was 200 bps. The term and revolving facility had a termination date of the earliest of either (a) the business day 12 months after the initial utilization date of the term facility (subject to a six-month extension option), (b) 30 months after the August 25, 2016 facilities agreement, or (c) the final maturity date of the $15,000,000,000 USD term loan facility coordinated by HSBC and signed on March 7, 2016. The term facility was repayable in full on its maturity date, and CNAC (HK) Investment Company Limited was required to prepay the term facility in certain circumstances, including if there was a change of control of ChemChina, one of the Hong Kong holding companies, CNAC Century (Lux) S.à r.l. — a Luxembourg-incorporated SPV wholly owned by CNAC Saturn (HK) Company Limited— or CNAC Saturn (NL) B.V. — a Netherlands-incorporated SPV wholly owned by CNAC Century (LUX) S.à r.l. and the purchaser of Syngenta — or a flotation by any of the Hong Kong holding companies. The term facility had an availability period that was the earliest of the squeeze out closing date, the offer expiry date, or either 18 months after March 7, 2016 if the initial closing date has not occurred or 30 months after March 7, 2016 if the initial closing date occurred. The revolving facility had an availability period from the closing date to its termination date. The loan included financial covenants for ChemChina, CNAC, the borrower, and other Hong Kong holding companies; ChemChina was required to adhere to a maximum consolidated total net debt to consolidated total assets ratio of 85% and a minimum interest cover ratio (the ratio of consolidated EBITDA to finance charges) of (i) 1.25:1 (on or before June 30, 2017), (ii) 1.375:1 (on or before June 30, 2018), and (iii) 1.5:1 (after June 30, 2018). The first utilization of the facilities agreement was condition upon the execution and/or delivery of definitive financing, transaction, and security document; the receipt of a certificate by CNAC Saturn (NL) B.V. confirming the offer for Syngenta had become unconditional; and the deposit of specified cash collateral in an interest reserve account subject to security in favor of the security agent. This loan was secured by (i.e. collateralized against) a first-priority security interest in its owned shares of CNAC Century (HK) Company Limited granted by CNAC Saturn (HK) Company Limited; a first-priority security interest in its owned shares of CNAC (HK) Investment Company Limited granted by CNAC Century (HK) Company Limited; a first-priority security interest in certain of its owned bank accounts and its owned shares of CNAC (HK) Holdings Company Limited granted by CNAC (HK) Investment Company Limited; a first-priority security interested in certain of its owned bank accounts granted by CNAC (HK) Holdings Company Limited. China CITIC Bank International served as the security agent. ChemChina and CNAC served as guarantors for the facilities agreement. On May 8, 2017, CNAC (HK) Holdings Company Limited acceded to the facilities agreement as an additional guarantor Upon entry into the $12,700,000,000 USD syndicated HoldCo Facilities Agreement on August 25, 2016, CNAC Century (HK) Company Limited cancelled $12,500,000,000 USD of commitments under the $30,000,000,000 USD term loan facility. Then, on May 13, 2017, CNAC Century (HK) cancelled all remaining commitments under the $30,000,000,000 USD term loan facility and terminated the facility following the funding of equity contributions. The first loan disbursement of the HoldCo Facilities Agreement occurred on May 16, 2017 and the second (and last) occurred on June 5, 2017. Beijing Branch of China CITIC Bank contributed $2,200,000,000 USD to the $12,500,000,000 USD term facility as captured by Record ID#100831. China CITIC Bank International contributed $600,000,000 USD to the $12,500,000,000 USD term facility as captured by Record ID#100832. The Hong Kong Branch and Shanghai Pilot Tree Trade Zone Branch of SPDB each contributed $750,000,000 ($1,500,000,000 USD total) to the $12,500,000,000 USD term facility as captured by Record ID#100833. The remaining contribution breakdown to the $12,500,000,000 USD term facility was as such: the Beijing Branch of Industrial Bank Co., Ltd. ($3,000,000,000 USD), BNP Paribas S.A. (acting through its Hong Kong Branch) ($940,000,000 USD), the Hong Kong Branch of Crédit Agricole Corporate and Investment Bank (CACIB) ($940,000,000 USD), the Singapore Branch of Credit Suisse AG ($940,000,000 USD), the Hong Kong Branch of Natixis ($940,000,000 USD), the Hong Kong Branch of UniCredit Bank AG ($470,000,000 USD), UniCredit S.p.A. ($470,000,000 USD), and the Hong Kong Branch of Coöperatieve Rabobank U.A. ($500,000,000 USD). China CITIC Bank International was the sole provider of the $200,000,000 USD revolving facility, as captured by Record ID#100940. China CITIC Bank Corporation and China CITIC Bank International served as Global Co-Ordinators. The Beijing Branch of China CITIC Bank Corporation, China CITIC Bank International, the Beijing Branch of Industrial Bank Co., Ltd., the Hong Kong Branch of SPDB, the Shanghai Pilot Free Trade Zone Branch of SPDB, BNP Paribas through its Hong Kong Branch, CACIB, the Singapore Branch of Credit Suisse, the Hong Kong Branch of Natixis, UniCredit Bank AG, and UniCredit S.P.A. served as mandated lead arrangers and bookrunners. The Hong Kong Branch of Rabobank served as mandated lead arranger. China CITIC Bank International served as agent. China CITIC Bank International served as security agent. Syndication closed in late September 2016; First Gulf Bank (FGB), HSBC Bank, Banco Santander S.A., Société Générale S.A. (SocGen) joined as arrangers, Bank of East Asia (BEA), CTBC Bank, Taipei Fubon Commercial Bank, and Taishin International Bank joined as participants. In total, 17 banks contributed to the loan. Furthermore, on March 7, 2016, a syndicate of non-Chinese state-owned banks led by HSBC Bank plc entered into a $15,000,000,000 USD term loan facility with CNAC Saturn (NL) B.V. for the acquisition. In addition to HSBC Bank plc, the other lenders to this loan were Coöperatieve Rabobank U.A., trading as Rabobank London, Coöperatieve Rabobank U.A., Hong Kong Branch,Credit Suisse AG and its London Branch, UniCredit Bank AG, UniCredit S.p.A., and the Hongkong and Shanghai Banking Corporation Limited. Then, in or by May 2017, the Bank of China (BOC) entered into a $10,000,000,000 USD term loan facility agreement with Global Chem Investment Limited — a Cayman Islands-incorporated special purpose vehicle (SPV) affiliated or owned by BOC — to finance its subscription (equity investment) of $10,000,000,000 USD in perpetual bonds issued by CNAC (HK) Investment Company Limited on May 12, 2017 that supported ChemChina's acquisition of Syngenta. BOC served as arranger and the Luxembourg Branch of BOC as agent and security agent. Record ID#100969 captures this $10 billion USD loan to Global Chem Investment Limited. In the end, CNAC Saturn (NL) directly used funds drawn from the following sources by ChemChina to pay for the acquisition: the $12.5 billion USD syndicated HoldCo Facilities Agreement with CNAC Century (HK); $6,812,310,246 USD from the $15 billion USD term loan facility with CNAC Saturn (NL) coordinated by HSBC; $2 billion USD raised by the issuance of convertible preference shares by CNAC (HK) Investment to CNAC (HK) Synbridge Company Limited, which in turn raised $2 billion USD by issuing notes to Morgan Stanley & Co. International plc; $1 billion USD raised by the issuance of perpetual bonds by CNAC (HK) Investment to a SPV which sourced its funds from Industrial Bank Co., Ltd.; $10 billion USD raised by the issuance of perpetual bonds by CNAC (HK) Investment to Global Chem Investment Limited which sourced its funds from Bank of China (BOC); $7 billion USD raised by the issuance of perpetual bonds by ChemChina Century Company Limited to a certain SPV which sourced its funds from China Reform Holdings Corporation Limited; and $5 billion USD internally sourced by ChemChina. Syngenta has operations in Switzerland, the United Kingdom, Russia, Canada, Brazil, Argentina, and the United States. In 2015, Syngenta had sales of $13.4 billion USD primarily from its crop protection businesses such as pesticides and seeds. This was the largest overseas merger and acquisition by a Chinese company at the time. It was expected transform ChemChina into the world's biggest supplier of pesticides and agrochemicals and while preventing Monsanto Company from acquiring Syngenta. ChemChina expressed plans to retain Syngenta's managements and pursue an initial public offering in the years to come. ChemChina expected that Syngenta, using ChemChina's infrastructure and sales network and e-commerce platform, would have massive growth potential in China. ChemChina believed that the acquisition would advance the sustainability and agricultural modernization goals of the Chinese government. The acquisition was required to win approval from the Committee on Foreign Investment in the United States (CFIUS), which would review the acquisition's implications on American food security and the merged company's proximity to U.S. military bases. The acquisition was expected to close by the end of 2016. On April 26, 2016, shareholders owning 50.68% of Syngenta approved the transaction. On June 14, 2016, ChemChina announced it had begun substituting equity for part of the loan financing, with a $5 billion USD equity commitment from Feng Xin Jian Da LP, a fund managed by CITIC Trust Co., Ltd., a subsidiary of CITIC Limited, allowing for its existing loan facilities to be reduced. On August 22, 2016, CFIUS approved the acquisition. On October 28, 2016, the European Union announced it would enter Phase II of its merger review on October 31, 2016 for a 90-day review. Then, on November 17, 2017, the European Commission announced it would extend the review by 10 working days to March 29, 2017. On December 7, 2016, Australia's Competition and Consumer Commission announced that it would not oppose the acquisition. On April 5, 2017, the European Commission approved the acquisition after ChemChina agreed to divest from a significant portion of its assets at ADAMA Agricultural Solutions Lt, its wholly-owned Israel-based subsidiary that produces generic pesticides, including fungicides for cereals, fruits, and oilseed rape, herbicides for cereals, corn, sunflower, and vegetables, insecticides for cereals, corn, fruits, oilseed rape, and vegetables, and its seed treatment products for cereals and sugar beet, 29 of Adama's generic pesticides under development, Adama's plant growth regulator business for cereals, some of Syngenta's pesticides, including fungicides for vegetables and herbicides for cereals, vegetables, and sunflower, and relevant intangible assets underpinning the divested pesticide and plant growth regulator products and relevant personnel. On April 12, 2017, Mexico's Comisión Federal de Competencia Económica and China's Ministry of Commerce both approved the acquisition. On May 4, 2017, ChemChina's offer for Syngenta closed. On May 5, 2017, ChemChina obtained control of Syngenta. On May 18, 2017, ChemChina announced the successful completion of the first settlement of tender offer. Then, on June 7, 2017, the second settlement was successfully completed on June 7, 2017, marking effective completion of the acquisition. On January 8, 2018, Syngenta AG was delisted from SIX Swiss Exchange and on January 18, 2018, Syngenta AG ADSs (American depositary shares) were delisted from the New York Stock Exchange. This acquisition was not without controversy. The National Farmers Union (NFU) in the United States called on the U.S. Federal Trade Commission (FTC) to oppose the acquisition, arguing that it would lead to reduced competition and higher prices for consumers and would give the Chinese government another advantage in controlling it market. Furthermore, Syngenta did not experience the expected successes heralded during the acquisition. In 2019, only $300 million USD of its $10.6 billion USD crop protection sales and $35 million USD of its $3.1 billion USD seeds sale came from China, its supposed major growth market; the high opposition to genetically modified crops and new agrochemical regulation in China was thought to be responsible. Syngenta AG also had debt issues, with a debt-to-asset ratio of 80.04% in 2020; its parent, ChemChina and CNAC, also had significant debt problems. In 2020, ChemChina was added to a U.S. government list of People's Liberation Army-affiliated companies, an indication of potential sanctions. Then, in March 2018, a syndicate of 40 banks — including China CITIC Bank International Limited and the Beijing Branch of China CITIC Bank Corporation Limited — entered into $5.5 billion USD syndicated dual-tranche loan agreement with ChemChina for the Syngenta Acquisition Refinancing Project. This loan consisted of a $3.85 billion USD tranche with a maturity period of three years and an interest rate of USD LIBOR plus a margin of 153 bps and a $1.65 billion USD tranche with a maturity period of five years and an interest rate of USD LIBOR plus a margin of 195 bps. The proceeds of this loan were to be used by the borrower to refinance debt taken by ChemChina entities for the Syngenta, including the $12.7 billion USD bridge loan. Record ID#100970 captures China CITIC Bank International's contribution. Record ID#100971 captures the Beijing Branch of China CITIC Bank's contribution.