Bank of China contributes to a $750 million USD syndicated revolving credit facility to Yara International for refinancing and general corporate purposes

Project narrative

On March 18, 2004, a syndicate of 25 banks — including the Bank of China (BOC) — signed a $750 million USD syndicated revolving credit facility (RCF) agreement with Yara International ASA — a Norway-incorporated and based company and the former fertilizer business of Norsk Hydro ASA, a Norwegian aluminum and energy company, a company minority owned by the Government of Norway — for refinancing and general corporate purposes. This RCF carried a maturity period of five years and an interest rate based on a floating rate plus a margin of 42.5 basis points (bps) until the end of 2004, after which it would ratchet based on a net debt-to-equity grid for the borrower (ratio of 1.25 to 1.4, a margin of 55 bps; ratio of 1.0 to 1.25, a margin of 42.5 bps; ratio of 0.75 to 1.0, a margin of 37.5 bps; and a ratio below 0.75, a margin of 32.7 bps). There was a utilization fee of 2.5 bps for between 50% and 74% drawn and 7.5 bps for over 75% drawn and a commitment fee equal to 40% of the margin (0.17% of the starting margin). The proceeds were to be used by the borrower to refinance facilities made available to it by Norsk Hydro as of March 19, 2004, to on-lent to its subsidiaries in the Netherlands to refinance facilities made available to said subsidiaries by Norsk Hydro and its subsidiaries, and for general corporate purposes. In addition to BOC, the following lenders contributed to the loan syndicate: Citigroup Global Markets Limited, Commerzbank AG, DnB NOR Bank ASA, J.P.Morgan PLC, Nordea Bank Abp, Société Générale Corporate & Investment Bank (SGCIB), Barclays Bank Plc, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), Calyon, Danske Bank A/S, Deutsche Bank AG, Svenska Handelsbanken AB, National Australia Bank Limited (NAB), Norddeutsche Landesbank Girozentrale (NORD/LB), Royal Bank of Scotland (RBS), Skandinaviska Enskilda Banken AB (SEB), Sumitomo Mitsui Banking Corporation (SMBC Group), ABN AMRO Bank N.V., BNP Paribas S.A., Landesbank Hessen-Thüringen (Helaba), Banca Intesa S.p.A. (IntesaBci S.p.A.), Coöperatieve Rabobank U.A. (Rabobank), Swedbank, and Standard Chartered Bank PLC. CGML, Commerzbank, and SGCIB served as mandated lead arrangers and bookrunners. DnB NOR, J.P.Morgan, and Nordea served as mandated lead arrangers. DnB NOR served as Facility Agent. BOC, Barclays, BBVA, Calyon, Danske Bank, Deutsche Bank, Handelsbanken, NAB, NORD/LB, RBS, SEB, and SMBC served as arrangers. ABN AMRO, BNP Paribas, Helaba, IntesaBCI, Rabobank, Swedbank, and Standard Chartered served as co-arrangers. The loan was oversubscribed during syndication by 40%, but not increased. Arrangers were offered tickets of $50 million USD and 17.5 bps and co-arrangers were offered $25 million USD and 12.5 bps. The mandated lead arrangers also provided a separate $750 million USD 364-day bridging facility that was not syndicated. Yara International ASA was formed by Norsk Hydro for the demerger of Hydro's fertilizer business; the demerger had financial effect from October 1, 2003 and was completed on March 24, 2004, with Yara listed on the Oslo Stock Exchange on March 25, 2004. Norsk Hydro's shareholders received one share in Yara International for each share they owned of Hydro. Under the Norwegian public limited companies act section 14-11, Hydro and Yara were jointly liable for liabilities accrued before the demerger date. As part of the demerger, Yara assumed a liability to pay to Hydro a net interest bearing bet on completion of kr7.1 billion NOK; Yara International used the proceeds of debt financing (possibly the $750 million USD five-year loan or the $750 million USD 364-day bridging facility) to repay this debt. Norsk Hydro's shareholders received one share in Yara International for each share they owned of Hydro.