Narrative
Full Description
Project narrative
On August 31, 2012, Weichai Power (Luxembourg) Holding S.à r.l. (a Luxembourg wholly-owned subsidiary of Weichai Power Co., Ltd., a Chinese state-owned developer and manufacturer of automotive and other and subsidiary of Chinese industrial manufacturer Shandong Heavy Industry Group Co., Ltd.) entered into an agreement to acquire a 25% stake in KION Group GmbH (a German multinational firm that manufacturers materials handling equipment and the world's second largest maker of forklift trucks and the lead non-domestic supplier of industrial to China) and a 70% stake in Linde Hydraulics GmbH & Co. KG (a unit of KION Group) for a consideration of €738 million EUR ($922 million USD) from KION's private equity shareholders, KKR and Goldman Sachs, with a €467 million EUR capital increase for the 25% stake in KION Group and a €271 million EUR payment to KION Group for the 70% stake in Linde Hydraulics. To finance this acquisition, Weichai pursued €738,000,000.00 EUR (RMB 6,144,249,958.75) in debt financing. Then, on December 27, 2012, the Hong Kong Branch of China Development Bank Corporation (CDB) issued €553.5 million EUR (RMB 4,608,187,469.076) loan agreement with Weichai Power Hong Kong International Development Co., Limited — a Hong Kong-incorporated wholly owned subsidiary of Weichai Power Co., Ltd. — to facilitate Weichai's acquisition of of a 25% stake in KION Group and a 75% stake in Linde Hydraulics. This loan carried a maturity period of nine years, a final maturity date of December 27, 2020, and an annual interest rate of 2.8180%. Weichai Power provided a guarantee for this loan. The loan was drawn down on December 27, 2012. Record ID#102164 captures the CDB loan. Then, on December 29, 2012, the Industrial and Commercial Bank of China (Asia) Limited (ICBC (Asia)) issued a €184,500,000 EUR (RMB 1,536,062,489.69) loan agreement with Weichai Power Hong Kong International Development Co., Limited to facilitate the acquisition. This loan carried a maturity period of three years, a final maturity date of December 19, 2015, and an annual interest rate of 1.5840%. Weichai Power provided a guarantee for this loan. The loan was drawn on December 29, 2012. Record ID#102195 captures the ICBC (Asia) loan. Weichai pledged to honor all of the existing collective labor agreements of KION, to establish a new production facility for Linde Hydraulics in Germany, and to expand the companies' activities in China. The acquisition was expected to improve KION Group's access to the Chinese and Asian markets and to support the Chinese Government's five-year development plan that emphasized growth in high-end manufacturing equipment. At the time, this acquisition was the largest direct investment in Germany by a Chinese company. Specifically under the acquisition, Weichai Power (Luxembourg) Holding S.à r.l. was the acquiring entity, acquiring via capital increase a 25% share in KION Holding 1 GmbH (the strategic management holding and operational parent company of the KION Group) with the remaining 75% of shares of KION Holding 1 retained by investment vehicles and subsidiaries of Goldman Sachs Capital Partners and KKR & Co. L.P. and an management participation company and Linde Material Handling GmbH, and a 70% stake in the holding company of Linde Hydraulic, Linde Material Handling GmbH. The acquisition was expected to close in the final three months of 2012. The acquisition agreement was amended on December 20, 2012 The acquisition was completed on December 27, 2012. Weichai Power (Luxembourg) Holding had call options that would increase its holding of KION to 33.3% of its total issued share capital immediately after completion of an initial public offering (IPO) (provided by the other shareholders, Superlift Holding S.a. r.l. and Kion Management Beteiligungs GmbH & Co. KG) if, prior to the IPO, Weichai Power (Luxembourg) held 28.3% of more of the share capital of KION; it also had an alternative a call-option for 30% of KION's total issued share capital immediately after completion of IPO if it owned less than 28.3% of KION, with an exercise price of the lower of a price per share determined on the basis of €467,000,000 EUR (equivalent to Weichai paid for the 25% stake) or the price per share of KION under the IPO. Weichai Power (Luxembourg) Holding also had a call option for 3.3% of KION's issued share capital owned by Superlift Holding, S.a. r.l., that could be exercised from any time after the completion of the acquisition to June 30, 2013 or any time within the three months after the IPO, with a hard expiry of December 31, 2015, with an exercise price equaling the sum of €61,644,000 EUR and the pro-rata portion of the aggregate amount of any additional capital contribution made to KION after completion of acquisition. Additionally, Weichai Power (Luxembourg) Holdings had a put option to acquire a further 20% stake in Linde Hydraulics (leaving it with a 90% stake). On May 26, 2013, in the presence of Chinese Premier Li Keqiang and German Chancellor Angela Merkel, CDB signed an agreement with KION Group and Weichai Power in which CDB pledged to provide up to €500 million EUR ($647 million USD) in financing, among other services, to support cooperation between KION Group and Weichai Power. Then, on June 15, 2013, the Hong Kong Branch of CDB entered a €300,000,000 EUR (RMB 2,489,447,820.07) loan agreement with Weichai Power Hong Kong International Development Co., Limited to further facilitate the acquisition of KION Group, specifically under the 5% call option in KION Group. This loan carried a maturity period of eight years, a final maturity date of June 14, 2021, and an interest rate of 3.0410%. Weichai Power provided a guarantee for this loan. The loan was drawn down on June 15, 2013. Record ID#102196 captures this CDB loan. In June 26, 2013, Weichai Power (Luxembourg) Holding exercised its call option over KION Holding 1 GmbH, increasing its stake by 5% from 25% to 30% via specifically subscription of 13,682,500 new shares in KION Group at €24 EUR per share, or €328,380,000 EUR total. On June 28, 2013, KION Holding 1 GmbH was listed on the Frankfurt Stock Exchange, where it was renamed as KION Group AG. On December 18, 2013, Weichai Power (Luxembourg) Holding elected to exercise the call option on the 3.3% shares in KION Group held by Superlift. The transfer was completed on January 15, 2014, leaving Weichai with a 33.3% stake in KION Group AG.