Narrative
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Project narrative
On June 2, 2016, a two-bank syndicate — the Paris Branch of the Industrial and Commercial Bank of China (Europe) S.A. and the Frankfurt am Main Branch of the Industrial and Commercial Bank of China (ICBC) — signed a €4.6 billion EUR syndicated bridge loan agreement with MECCA International (BVI) Limited — a British Virgin Islands-incorporated offshore, investment, and holding special purpose vehicle (SPV) wholly owned by Hong Kong-incorporated Midea International Corporation Company Limited, a wholly-owned subsidiary of Midea Group Co., Ltd., a Chinese private sector electrical appliance manufacturer listed on the Shenzhen Stock Exchange — to finance Midea Group's acquisition of German robotics manufacturer KUKA Aktiengesellschaft (AG). This loan carried a maturity period of one year. The loan was available until April 15, 2017, with conditions on drawings based on the meeting of disbursement and documentation requirements. Midea Electric Investment (BVI) Limited — a British Virgin Islands-incorporated subsidiary of Midea Group — issued a corporate guarantee for the loan. Midea Group signed a keepwell deed for the loan. ICBC was the mandated lead arranger. In January 2017, €3.7 billion EUR was drawn down and used for the acquisition. Record ID#102135 captures ICBC's contribution. Record ID#102136 captures ICBC (Europe)'s contribution. On June 16, 2016, MECCA International (BVI) published its offer to purchase all no-par value bearer shares of KUKA AG for a price of €115 EUR ($129 USD) per share for a consideration of €4.5 billion EUR (£3.58 billion GBP), with an acceptance period from June 16 to July 15, 2016, Midea sought to acquire, at minimum, 30% of KUKA, which would allow it to bid for the rest of the shares under German takeover law. At the time of the offer, Midea Group owned 13.506% of the shares in KUKA, its second-largest shareholder. The proceeds of the bridge loan were used by the borrower to finance the acquisition of KUKA shares via the offer and related transaction costs. At the time of the acquisition, KUKA AG was a stock corporation existing under German law with its registered headquarters in Augsburg, Germany. traded on the Frankfurt Stock Exchange and the Munich Stock Exchange KUKA develops, designs, manufactures, sells, and maintains industrial and robots and robot-based products and other handling systems; develops, plans, designs, manufactures, constructs, sells, operates, and markets equipment, machines, and tools of assembly and production technologies; and provides data processing, human resources, and fleet systems services particularly for the property and building management the fields. Together with its subsidiaries, the KUKA Group operates in 30 countries and had 12,300 employees as of 2015 and generated €2.9659 billion EUR of revenue in 2015. KUKA is considered to be one of the world's Big Four industrial robotics firm, a leading example of Germany's ""Industrie 4.0"" platform. KUKA was number three in the global robotics market and number one in Europe. When announcing the offer, Midea stated it would preserve KUKA's independence, its facilities, its current employee levels, and its intellectual property if accepted while improving KUKA's access to the Chinese market and its supply chain and distribution there. The acquisition of KUKA would allow Midea access to an advanced digitized warehouse and distribution system developed by KUKA subsidiary Swisslog, and would help improve its production automation of appliances such as air conditions and refrigerators. While by law it was obligated to bid for all the shares of KUKA, Midea sought to acquire a majority stake and keep it as a publicly-listed company. The acquisition of KUKA sparked debate in Germany. As a symbol of ""Industrie 4.0"", KUKA was seen as important to Germany's economic success, with KUKA robots working production lines of German automakers like BMW and Volkswagen and its research into artificial intelligence and cloud-based information systems. When the acquisition was announced, some German politicians suggested that the acquisition be prevented or limited on the grounds that keeping KUKA German — or, at minimum, European — was important. Vice Chancellor and Minister for Economic Affairs and Energy Sigmar Gabriel (Head of Germany's Social Democratic Party (SPD)), for instance, argued for keeping KUKA a European company and stated that it would be best if a German or European company made an alternative acquisition; this blunt talk by a German politician on a corporate merger & acquisition was unprecedented in Germany. German Chancellor Angela Merkel spoke that she did not intend to block the acquisition, but stated she would welcome a counter-off from a German company. However, Siemens and ABB, the two most suitable firms, were not interested in making an offer because Midea's €115 EUR per share was too expensive to match. The Government of Germany reportedly sought a deal to limit Midea's stake to 49% to limit foreign influence in its ""national champion"", but decisions by the major German shareholders of KUKA to accept the offer torpedoed that plan. In August 2016, Germany's Ministry for Economic Affairs and Energy announced that it would not oppose the takeover. KUKA's role in advancing Chinese Government policy drew specific concern as well. On June 21, 2016, related to the acquisition, KUKA signed a deal with Midea to support China's manufacturing industry. The sale of industrial robots was rising significantly in China, but the need for creative firms like KUKA was clear to keep progress going. Robotics was one of the ten key industry sectors listed in the ""Made in China 2025"" strategy announced in 2015; China sought to become the world's leading nation in it by 2025, and to do it required to expand its economic access and its technological competitiveness. Acquiring foreign companies is key to this strategy, and acquiring KUKA, one of the world's leaders in robotics, would advance it greatly, so selling it was problematic. In December 2016, KUKA sold its U.S. aerospace division, KUKA Systems Aerospace North America, to U.S. automation company Advanced Integration Technology Inc. KUKA Systems in involved in the sensitive U.S. aerospace sector, and KUKA's sale of it allowed to simplify regulatory approval by U.S. authorities. In late December 2016, the Committee on Foreign Investment in the United States (CFIUS) and the Department of State's Directorate of Defense Trade Controls approved the acquisition. A total of 81.04% of KUKA shareholders accepted the offer, giving Midea a 94.55% stake when including its existing shares. The acquisition of 32,233,536 KUKA shares for a total transaction price of €3,706,856,640 EUR was completed on January 6, 2017. While the acquisition was not blocked, the KUKA acquisition sparked the German Government to pursue changes to its foreign investment rules to allow it more power to block deals. Then, on August 28, 2017, it was announced that a syndicate of seven banks — the Bank of China (BOC), ICBC, the Export-Import Bank of China, China Construction Bank Corporation (CCB), Postal Savings Bank of China (PSBC), the Agricultural Bank of China (ABC), and China Minsheng Banking Corporation (CMBC) — entered into a €3.7 billion EUR ($4.35 billion USD) syndicated loan agreement with Midea Electrics Netherlands B.V. — a Netherlands-incorporated wholly-owned subsidiary of Midea Group — to refinance the €3.7 billion EUR bridge loan used to acquire KUKA. This term loan carried a maturity period of five years with two one-year extension options and an interest rate based on a floating rate plus a 0.9% fixed margin. The proceeds were to be used by the borrower to refinance the 2016 €3.7 billion EUR loan from ICBC. BOC and ICBC each committed €780 million EUR. China Eximbank committed €770 million EUR. CCB committed €500 million EUR. PSBC committed €490 million EUR. ABC committed €280 million EUR. CMBC committed €100 million EUR. Record ID#102137 captures BOC's contribution. Record ID#102138 captures ICBC's contribution. Record ID#102139 captures China Eximbank's contribution. Record ID#102140 captures CCB's contribution. Record ID#102141 captures PSBC's contribution. Record ID#102142 captures ABC's contribution. BOC served as sole bookrunner and mandated lead arranger. CCB and ICBC joined in syndication as mandated lead arrangers. China Eximbank, ABC, PSBC, and CMBC joined in syndication as participants. This loan was further syndicated to eight Chinese banks. Then, in August 2022, a syndicate of 12 banks — including BOC, China Construction Bank (Asia) Corporation (CCB (Asia)), ICBC, ABC, Nanyang Commercial Bank (NCB), and Bank of Communications (BoComm) — entered into a $3.4 billion USD (€3 billion EUR) syndicated loan agreement with Midea Group to refinance the 2017 €3.7 billion EUR syndicated loan. This loan carried a maturity period of three years. The proceeds were to be used by the borrower to refinance the €3.7 billion EUR loan. Record ID#102143 captures BOC's contribution. Record ID#102144 captures CCB (Asia)'s contribution. Record ID#102145 captures ICBC's contribution. Record ID#102146 captures ABC's contribution. Record ID#102147 captures NCB's contribution. Record ID#102148 captures BoComm's contribution. In late 2021, Midea Group announced that it was pursuing a squeeze-out of the remaining shareholders and a de-listing of KUKA, in order to make Midea the 100% owner of the company. It was announced that the headquarters and the 3,500 employees attached would remain in Augsburg, Bavaria until at least 2025, with some believing that Midea would relocate the headquarters to Asia afterwards. The squeeze-out was completed on November 8, 2022.