China Eximbank provides M&A loan to China Huaxin to finance its acquisition of an 85% ownership stake in Alcatel-Lucent Enterprise

Project narrative

On October 1, 2014, China Huaxin Post & Telecommunication Economy Development Center closed an agreement with Alcatel-Lucent to acquire an 85% stake in the company's Enterprise division for €202 million EUR ($250 million USD). The proposed acquisition was first announced in February 6, 2014, undergoing regulatory approvals before being closed on October 1. China Huaxin had already worked closely with Alcatel-Lucent, being part of the Alcatel Shanghai Bell (ASB) joint venture in China. The transaction was primarily financed by a China Eximbank M&A loan to China Huaxin. The borrowing terms of the loan are unknown. However, it is known that loan was collateralized against China Huaxin’s 85% equity stake. The security interest was codified in a share pledge agreement that China Huaxin executed in favor of China Eximbank (as a “secured party”). Under the terms of the deal. Alcatel-Lucent maintained a 15% equity stake in the newly formed company, which was to be headquartered in France. The sale of Alcatel-Lucent's Enterprise division was the result of the company's plan to significantly reduce its operating costs.