China CITIC Bank contributes $240 million USD to a $800 million USD syndicated loan to facilitate Beijing JianGuang Asset Management and Wise Road Capital's acquisition of the Standard Products business of NXP N.V.

Project narrative

On January 25, 2017, a syndicate of three banks — the Head Office Business Department of China CITIC Corporation Bank Limited as lead bank, the Shanghai Free Trade Zone Branch of China Minsheng Banking Corporation (CMBC) as lead bank, and DBS Bank as lead bank — entered into a $800,000,000 USD syndicated loan agreement with Nexperia Holding B.V. — a Netherlands-incorporated special purpose vehicle (SPV) wholly owned by Hefei Yuxin Holdings Co., Ltd., a joint venture of Chinese state-owned investment company Beijing JianGuang Asset Management Co., Ltd. (JAC Capital) and Cayman Islands-incorporated Chinese private equity fund Wise Road Capital LTD — to facilitate their acquisition of the Standard Products (SP) business of NXP B.V. This loan carried a maturity period of five years with a final maturity date of February 3, 2022, and an interest rate of 3-month LIBOR plus a margin of 340 basis points (bps) with interest repaid quarterly and then repayment in installments with a balloon repayment. Citicorp International Limited served as correspondent bank and security agent. This loan was secured by (i.e. collateralized against) a share mortgage of 100% shares of Nexperia Holding B.V. (Chinese: 裕成控股有限公司) pledged to Citicorp International by Hefei Yuxin Holdings Co., Ltd., a direct parent company, in a share mortgage contract dated January 25, 2017. China CITIC Bank committed $240 million USD, CMBC committed $480 million USD, and DBS Bank committed $80 million USD. The loan was drawn down on or around February 8, 2017. Record ID#102535 captures China CITIC Corporation's contribution. The SP business of NXP provided standard semiconductor components such as small signal discretes, power discretes, protection and signal conditioning devices and standard logic devices, mostly produced via dedicated in-house high-volume manufacturing operations, with customers including original equipment manufacturers (OEMs) and distributors. The SP business was considered to be the world's leader in coverage, production capacity, and profitability of semiconductor components, with over 20,000 customers in automotive electronics, industrial control, telecommunications, and consumer electronics. The SP business had earnings before interest, taxes, depreciation and amortization (EBITDA) of $281.3 million USD in 2015. The acquisition included the SP business and its complete business system, its design department, its research & development, marketing, and sales and NXP's two wafer manufacturing plants in the United Kingdom and Germany, three packaging and testing plants in China, Malaysia, and the Philippines, and NXP's industrial technology equipment center in the Netherlands, and all relevant patents and technology reserves for the SP business, covering about 11,000 employees and the original management team (which the Chinese consortium planned to maintain, albeit with new members). This was, at this time, the largest overseas mergers & acquisition (M&A) in the Chinese semiconductor industry. The acquisition of dozens of NXP production lines and thousands of products was expected to greatly improve the Chinese semiconductor and integrated circuit industry. The acquisition was reported as the first time of that a Chinese company acquired the core technology and high-quality assets of a world-class semiconductor company, and was expected to improve the technical production of high-end chips in China. On June 14, 2016, JAC Capital and Wise Road Capital entered into a sale and purchase agreement with NXP B.V., a wholly-owned subsidiary of NXP Semiconductors N.V, for all issued and outstanding shares in the share capital of Nexperia Holdco Netherlands N.V., a Netherlands-incorporated company created to hold the Standard Products business of NXP, for a bid value of $2,750,000,000 USD (RMB 18.1 billion). The acquisition was expected to close in the first quarter of 2017, pending all required regulatory approvals and employee representative consultations. The acquisition received antitrust approval from China's Ministry of Commerce of China, the U.S. Federal Trade Commission (FTC), and the European Commission (EC) and national security approval from the Committee on Foreign Investment in the United States (CFIUS) despite increased scrutiny of Chinese acquisitions in Europe and the United States. The acquisition of SP, (subsequently named “Nexperia” or “安世半导体” in Chinese), was completed on February 6, 2017; NXP received $2.6 billion USD in cash proceeds, net of cash divested. In January 2018, Nexperia partly repaid $80 million USD under the $800 million USD acquisition loan. On April 10, 2018, a syndicate of nine banks — including the Luxembourg Branch of the Bank of China (BOC) and the Amsterdam Branch of the Industrial and Commercial Bank of China (Europe) S.A. — entered into a $743 million USD-equivalent syndicated loan with Nexperia Holding B.V. and Nexperia B.V. — the Netherlands-incorporated based wholly-owned subsidiary of Nexperia Holding B.V. — to refinance the acquisition of the SP business of NXP B.V. The loan carried a maturity period of five years and a final maturity date in April 2023, with interest payable on the last day of each interest cycle. The loan was divided into a $400 million USD revolving credit facility (RCF), €180 million EUR term loan A tranche, and a $120 million USD in term loan B tranche. The U.S.-dollar denominated tranches carried an interest rate of LIBOR (3-month for the term loan and one-month for the RCF) and the euro-denominated tranche carried an interest rate of 3-month EURIBOR, plus a margin dependent on the net financial leverage (total net debt to earnings before interest, taxes, depreciation and amortization (EBITDA)) that could range from 2.75% if the leverage was greater than or equal to 3.00:1 to 1.60% if the leverage was less than 1.00:1. At the time of the loan the margin was 1.75% per annum. The proceeds were to be used to fully repay (refinance) the remaining $720 million USD outstanding under the acquisition loan. Record ID#110843 captures BOC's contribution. Record ID#110844 captures ICBC (Europe)'s contribution. In October 2018, partially Chinese state-owned semiconductor and communications company Wingtech entered into an agreement to acquire a controlling stake in Nexperia from its existing shareholders for RMB 25.2 billion ($3.363 billion USD); Wingtech already had indirect stakes in the company through the existing owners. Under Wingtech, Nexperia experienced pressure from the Dutch Government and other governments because of heightened sensitivities about national security risks relating to China's access of national security risks, with the Dutch Government blocking the exports of chip technology to China. The Government of the United Kingdom reverted the acquisition of Britain's largest microchip factory by Nexperia because of these risks.