Narrative
Full Description
Project narrative
On February 8, 2013, China Development Bank Corporation (CDB) entered into a €450 million EUR senior export credit facility (loan) agreement with Jazztel Netherlands B.V. — a Netherlands-incorporated financing wholly-owned subsidiary of Jazztel P.L.C., an England and Wales-incorporated holding company of Spanish broadband operator Jazz Telecom S.A.U., Jazzplat S.A, and Jazzplat Chile LTDA listed on the Spanish Continuous Market — to support Jazz Telecom S.A's FTTH (fiber-to-the-home) Project in Spain. This loan carried a maturity period of seven years, a principal grace period of 2.5 years (first loan repayment date being November 20, 2015), an availability period of 2.5 years, and an interest rate of less than EURIBOR plus a margin of 400 basis points (bps). The loan had a repayment plan of ten semiannual installments of 10% of the principal beginning November 20, 2015. The loan had financial covenants including a leverage ratio of consolidated net debt to consolidated EBITDA equal to or less than 3:1, financial charges coverage ratio of consolidated EBITDA to financial charges must be not less than 1.5:1, and solvency ratio of total debt to total assets of the parents company must not be higher than 66.7%. Additionally, the borrower was prohibited from paying dividends during the availability period of the principal (2.5 years) and thereafter only if Jazztel's net debt-to-EBITDA ratio was less than 2.0x, with a limit of 50% of the net profits for the year. Jazztel P.L.C. and Jazz Telecom, S.A.U. each issued a payment guarantee to Jazztel Netherlands B.V. for the loan. This loan was secured by (i.e. collateralized against) a pledge on the assets (FTTH) that the loan was financing. The proceeds of the loan were to be used by the borrower to finance 85% of the contract cost (specifically, the lower of 85% of the contract cost or €450 million EUR) of a November 21, 2012 three-year contract between Jazztel and ZTE Zhongxing Corporation, S.L.U. — the Spanish subsidiary of ZTE Corporation — for the provision of equipment and services for the development and expansion of Jazz's national high-speed broadband FTTH Project. The project sought to deploy FTTH in three million real estate units under an October 2012 co-investment agreement signed with Telefónica. ZTE supplied its optical access platform, the ZXA10 C300 for the network's evolution to passive optical networks (NG PON) and wavelength division multiplexing (WDM) PON technology. ZTE also supplied 16-port gigabit passive optical network (GPON) boards and its 1+1 (optical network terminal (ONT) + home gateway) home networking solution. The project was expected to be completed in two years (November 2014). On October 22, 2013, ZTE announced that the FTTH network had begun commercial operation. As of February 2014, the FTTH network had been deployed in 1.2 million real estate units. On April 3, 2014, the European Investment Bank (EIB) signed a seven-year €150 million EUR loan agreement with Jazztel to support the FTTH Project in conjunction with the CDB debt. As of December 31, 2014, €176.7 million EUR was available under the €450 million EUR loan. Sometime later, but before intended, the borrower prepaid the facility and had its security released and released.