Bank of China provides a €80 million EUR-equivalent renminbi-denominated term loan B to support the Carlyle Group's acquisition of 100% of the issued shares in Flender GmbH (Linked to Record ID#103991)

Project narrative

In October 2020, the Carlyle Group Inc., an American private equity firm, agreed to acquire 100% of the issued shares in Flender GmbH — a German firm specializing in mechancal and electrical drive technology such as gearboxes, couplings, and generators headquartered in Bocholt, Germany — from German conglomerate Siemens AG for €2 billion EUR. Then, on or around January 21, 2021, a syndicate of 12 banks, including Bank of China (BOC), entered into a €965 million EUR syndicated sustainability-linked senior secured term loan B agreement with Zephyr German Bidco GmbH — a Germany-incorporated special purpose vehicle (SPV) indirectly controlled by Carlyle Europe Partners V S.C.Sp., a fund managed by affiliates of the Carlyle Group, with minority ownership by an affiliate of Carlyle Asia Partners V L.P. (CAP V), another Carlyle-managed fund — to support the Carlyle Group's buyout of Flender GmbH. This secured loan carried a maturity period of seven of years and an interest rate of EURIBOR plus a margin of 375 basis points (bps). As a sustainability-linked loan, this loan featured environmental, social, and governance (ESG) indicators against which the borrower's performance was assessed, specifically linked to the power volume of new gearbox installations in wind turbines, with a ratchet of 5 to 10 bps on the margin of the interest rate based on performance (if it grew by 5% of more, Flender would get a 10 bps reduction; the borrower committed to donate half of any margin savings from the ratchet to ESG charities. The proceeds were to support the borrower's buyout of Flender GmbH. The €965 million EUR term loan B was originally launched on January 7, 2021 as a €1.045 billion EUR term loan B, but was reduced after the carve-out of an €80 million EUR-equivalent renminbi-denominated term loan B tranche ranking pari passu and privately placed to BOC. Record ID#103991 captures BOC's contribution to the €965 million EUR term loan B. Record ID#103992 captures BOC's contribution to the €80 million EUR-equivalent RMB tranche. In addition to BOC, the following lenders contributed to the loan syndicate: BofA Securities Inc., Deutsche Bank, UniCredit S.p.A., Royal Bank of Canada (RBC), Commerzbank AG, Goldman Sachs Group Inc., NH Investment & Securities Co., Ltd (NH I&S), Landesbank Hessen-Thüringen (Helaba), MUFG Bank, Ltd., Skandinaviska Enskilda Banken AB (SEB), and Sumitomo Mitsui Banking Corporation (SMBC). BofA Securities, Deutsche Bank, and UniCredit served as physical bookrunners and mandated lead arrangers. RBC, Commerzbank, and Goldman Sachs served as passive bookrunners and mandated lead arrangers. BOC (as sole lead China arranger), NH I&S (as sole lead Korea arranger), Helaba, MUFG, SEB, and SMBC served as mandated lead arrangers. Deutsche Bank served as agent. BofA and Deutsche served as sustainability arrangers. In addition to the €965 million EUR term loan B and the €80 million EUR-equivalent RMB tranche, lenders provided a €150 million EUR revolving credit facility with a maturity period of 6.5 years and a €125 million EUR senior secured guarantee facility with a maturity period of 6.5 years. On January 19, 2021, the European Commission announced its non-opposition to the acquisition. On February 3, 2021, the Competition Tribunal of South Africa approved the acquisition. The acquisition was completed on March 10, 2021.