Narrative
Full Description
Project narrative
On January 11, 2016, it was announced that a consortium of China National Chemical Corporation (ChemChina) — a major Chinese state-owned chemical company — together with Guoxin International Investment Corporation (CNIC Corporation Limited) and Asian-European private equity firm AGIC Partners GmbH (AGIC Capital) entered into an agreement to acquire 100% of the equity of KraussMaffei Group GmbH — a German manufacturing company of plastics and rubber production and processing systems — for a cash enterprise value of €925 million EUR ($1.01 billion USD) from its owner Onex Corporation. ChemChina would take two-thirds of KraussMaffei as part of the acquisition. To support the acquisition, ChemChina sought a €625 million EUR five-year loan. On March 31, 2016, a syndicate of five banks — China Construction Bank Corporation (CCB), Banco Santander S.A., Mitsubishi UFJ Financial Group, Credit Suisse AG, and Taipei Fubon Commercial Bank Co., Ltd. — entered into a €450 million EUR ($508 million USD) syndicated loan agreement with CNCE Group (Hong Kong) Co., Limited — a Hong Kong-incorporated subsidiary of China National Chemical Equipment Co., Ltd. (CNCE), a wholly-owned subsidiary of ChemChina — to support the acquisition of KraussMaffei. This loan was divided into two tranches: a €230 million EUR tranche to support the acquisition and a €220 million EUR tranche for refinancing and general corporate purposes. This loan carried a maturity period of five years, a grace period of 2.5 years (30 months), then a repayment plan of five semi-annual repayments of 6% and then a balloon payment of 70% at maturity, and an interest rate of EURIBOR plus a margin of 215 basis points (bps). ChemChina issued a guarantee for the loan. Each lender, including CCB, contributed €90 million EUR to the loan syndicate. Banco Santander and CCB served as joint coordinating banks. CCB served as the quota agent bank and collateral control bank. As of April 18, 2016, part of the proceeds had been drawn. Record ID#102268 captures CCB's contribution. At the time, this was the largest-ever Chinese acquisition of a German company. Despite the acquisition, the KraussMaffei Group’s headquarters were to remain in Munich and the operating and corporate responsibility (production, technology, patents, and research & development) for it were to stay in Europe. The acquisition was expected to improve KraussMaffei's expansion in China and to improve ChemChina's chemical machinery business, helping it achieve the goals of the national "Made in China 2025" strategy, with future growth in the automotive industry as the development of advanced manufacturing and lightweight components made KraussMaffei's plastics business well-poised to grow. KraussMaffei was expected to bring Germany's "Industry 4.0" spirit to China's advanced manufacturing sector. This acquisition was expected to close in the first half of 2016. The acquisition was completed on April 29, 2016. China National Chemical Equipment (Luxembourg) S.à. r.l. was the specific acquiring entity of the 100% stake in KraussMaffei Group GmbH; later, in December 2010, China Chemical Equipment Global Holding (Hong Kong) Co., Ltd. acquired 100% equity of CNCE Luxembourg. Then, in September 2020, a syndicate of at least three banks — including CCB, Banco Santander, and Natixis as mandated lead arrangers and bookrunners — entered into a €860 million EUR syndicated facility agreement with CNCE Group (Hong Kong) Co., Limited to refinance debt associated with the KraussMaffei acquisition. This loan consisted of two tranches: a tranche known as 'Facility A' with a maturity period of three years and an interest rate of EURIBOR plus a margin of 135 bps and a tranche known as 'Facility B' with a maturity period of five years and an interest rate of EURIBOR plus a margin of 173 bps. Both tranches had bullet repayment profiles. The proceeds were to be used by the borrower to refinance debt taken for the acquisition of KraussMaffei in 2016. Syndication was launched in June 2020, with commitments due on July 10, 2020. Record ID#102269 captures CCB's contribution.
Staff comments
1. AidData has not applied its equal contributions assumption because there may be significantly more than three lenders to this loan, as the three lenders are merely the mandated lead arrangers and bookrunners, and they launched syndication for portions of the loan to other lenders. 2. The individual contributions of the lenders to this €860 million EUR syndicated loan, including whether they contributed to both tranches (and the face values of said tranches) are unknown. For the time being, AidData has assumed each lender contributed to each tranche. Therefore, to code the maturity period and interest rate of this record, AidData has taken the average of the maturity periods of the two tranches [(3 + 5} / 2 = 4] and the average of the interest rate margin [(1.35% + 1.73% / 2] = 1.54%} and coded them as the maturity period, interest rate, and interest rate margin of this record.