ICBC Leasing enters into a sale-and-leaseback agreement worth $1.435 billion USD with BOURBON for 46 vessels (Linked to Record ID#104806 and #104812)

Project narrative

On April 9, 2013, ICBC Financial Leasing Co., Ltd. (ICBCFL; ICBC Leasing) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement worth up to $1.5 billion USD (€1.1 billion EUR) with BOURBON S.A. — a French shipping oil and gas marine services company based in Marseilles listed on Euronext Paris — for up to 51 vessels, anchor handling tug supply (AHTS) ships and platform supply vessels (PSV). At signing, 24 of the vessels were already in operation and 27 were under construction and to be delivered in June 2014. The sale of the vessels was at market place with a vendor loan of a maximum of $116 million USD and then a bareboat vessel lease at a fixed rate over 10 years of 10.66% of the sale price. BOURBON had the right of first refusal in the event of ICBC Financial Leasing sell vessels during the lease period. The transaction was to be completed within two months of signing following completion of each party procedures. The deal also contained a provision for BOURBON pay ICBCFL an annual charter fee of about 8% of the vessel price. BOURBON pursued the sale-and-leaseback agreement as part of its restructuring program announced in March 2013 to reduce the group's debt. BOURBON would realize a capital gain of approximately 12% of the total value of the vessel sale. Record ID#104631 captures ICBC Leasing's sale-and-leaseback agreement. In November 2013, the Export-Import Bank of China entered into a $1.005 billion USD loan agreement with ICBC Financial Leasing to support the sale-and-leaseback for the 51 offshore support vessels designed and constructed by Sinopacific, which would then be purchased by ICBCFL and leased to BOURBON. All the vessels were multifunctional marine engineering auxiliary ships independently and designed by Sinopacific Shipbuilding Group. Record ID#104806 captures China Eximbank's loan. As of April 2014, $580 million USD of the $1.005 billion USD loan had been drawn. In January 2014, BOURBON sold 12 vessels to ICBCFL for $378 million USD as part of the deal, with nine of the vessels already transferred in September 2013. In total, in 2013, 21 vessels (17 shallow, 2 deep, and 2 subsea) were transferred to ICBCFL worth $522 million USD, with the remaining maximum of 30 to be transferred in the first half of 2014. In 2014, 25 more vessels (14 shallow, 16 deep, and 5 subsea) were transferred to ICBCFL worth $913 million USD, bringing the total number of vessels to 46 (31 shallow, 8 deep, and 7 subsea) worth $1.435 billion USD, with the transfers completed by December 2014. As the offshore industry degraded in 2015, BOURBON struggled to service bareboat commitments. In April 2017, ICBC Leasing signed an agreement with BOURBON to reschedule a large portion of the debt, restructuring the rents payments under the leasing via two-year extension of the initial bareboat charter period at a rate of 8%, giving a decrease by $240 million USD of the overall cash payments made by BOURBON for the years 2016 to 2018. Record ID#104812 captures this debt rescheduling. Sometime prior to July 2019, BOURBON and ICBC Leasing had been engaged in negotiations to reschedule the debts to ICBC in light of the offshore industry crisis; ICBC offered to swap $1.4 billion USD of debt for almost all of the equity in BOURBON, which the chief executive officer of BOURBON was not in favor of (as it would have wiped out the personal wealth of himself and his brother). On July 18, 2019, ICBC Leasing issued the first in a series of letters to BOURBON claiming $800 million USD for BOURBON; ICBC Leasing demanded immediate payment of all outstanding rental payments on these vessels up to 2026 (seven years of bareboat charter hire up front; beyond the 2023 or 2024 deadlines originally negotiated because of BOURBON's failure to pay earlier) in cash. Adding onto ICBC Leasing's demands was the guarantees BOURBON had issued to the Export-Import Bank of China and Minsheng Financial Leasing Co., Ltd. The letters led to panic in BOURBON; on July 22, 2019, BOURBON suspended trading of its shares on the Euronext Stock Exchange; shareholders were in danger of having their equity wiped out. BOURBON applied for "sauvegarde" protection from its creditors at the Commercial Court of Marseilles, which denied the application, and determined that the guarantees ICBC Leasing was drawing upon were valid and that BOURBON was legally insolvent on July 24, 2019. On July 25, 2019, BOURBON requested initiation of reorganization proceedings in the Commercial Court of Marseilles, which were to only concern the holding company and not the operating company, though its breakup seemed likely. The collapse in prices of vessels made that selling assets would not solve BOURBON's debt issues. BOURBON had 18 months to reach agreement with its creditors, including China Eximbank and Minsheng Leasing. In January 2021, after the court sanctioned recovery plan, conciliation protocol, and restructuring of BOURBON was completed, with a group of creditors, including ICBC Leasing, Standard Chartered Bank, French banking groups, other Chinese, British, Singaporean, Norwegian, and other international banks, converted their debt into shares held in Société Phocéenne de Participations (SPP), a French company set up to acquire the entirety of Bourbon’s assets. BOURBON's debt was reduced from €2.7 billion EUR to €1.065 billion EUR, with €228 million EUR converted into redeemable bonds for shares in SPP and other creditors injected further capital totaling €150 million EUR by way of senior financing.