Bank of China contributes €33 million EUR to the €967.5 million EUR commercial bank tranche of a €1.518 billion EUR syndicated loan for the SDFAST FTTH Network Project

Project narrative

On April 25, 2022, financial close was reached on a deal in which Crédit Agricole Corporate and Investment Bank (CACIB) entered into a syndicated project finance debt agreement with Société de Développement de la Fibre Au Service des Territoires S.A.S. (SDFAST) — a France-incorporated special purpose vehicle (SPV) jointly owned by Vauban Infra Fibre S.A.S. (VIF), a digital investment vehicle of French asset management company Vauban Infrastructure Partners S.C.A. (51% equity stake) and French telecommunications company Bouygues Telecom S.A. (BYT) (49% equity stake) — for the SDFAST Fiber-to-the-Home (FTTH) Network Project. Talks on syndication on the debt began in March 2022. Syndication was ongoing as of financial close. Then, on June 30, 2022, syndication was closed; as a result, a syndicate of 26 total lenders (11 institutional investors and 15 banks — including the Bank of China (BOC) — entered into a €1.518 billion EUR ($1.58683 billion USD) syndicated loan agreement with SDFAST for the SDFAST FTTH Network Project. This loan was divided into a €967.5 EUR million commercial bank tranche and a €600 million EUR institutional investor tranche; the €967.5 EUR million commercial bank tranche was divided into four sub-tranches: a €723 million EUR ($755.78 million USD) soft mini-perm capex facility tranche with a maturity period of 10 years and an interest rate based on a floating rate plus a margin of 210 basis points (bps) before rising by 20 bps to 290 bps in its final year, a €65 million EUR ($67.95 million USD) debt service reserve facility (DSRF) tranche with a maturity period of 10 years, a €49.9 million EUR ($52.16 million USD) equity bridge loan (EBL) tranche with a maturity period of 6.5 years, and a €130 million EUR ($135.9 million USD) VAT facility with €95.00 million EUR ($99.31 million USD) maturing in 2.5 years (grace period of 2.5 years) and €35.00 million EUR ($36.59 million USD) maturing in 6.5 years. The €600 million EUR institutional investor tranche carried a maturity period of 20 years and an interest rate based on a floating rate plus a margin of 215 bps. The debt featured drawdown tests with minimum penetration rate thresholds to acquire IRU rights, financial covenants such as maximum gearing and minimum LLCR during the availability period of the debt and subsequent minimum DSCR. This loan was also structured as a social loan aligned with the four core components of LMA/APLMA/LSTA’s Social Loans Principles 2021. This loan was secured by (i.e. collateralized against) a pledge on the access rights (irrevocable rights of usage (IRU)) of the infrastructure operators' FTTH networks acquired by SDFAST for a 20-year period with an automatic extension for an additional 20 years and pledge over the shares of SDFAST. In addition to BOC, the following banks contributed to the loan syndicate: CACIB, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), CaixaBank, S.A., Crédit Industriel et Commercial (CIC), MUFG Bank, Ltd., and Sumitomo Mitsui Banking Corporation (SMBC), Banque Internationale de Commerce - BRED (Suisse) S.A. (BIC-BRED), Landesbank Hessen-Thüringen (Helaba), KEB Hana Bank, KfW IPEX-Bank GmbH, Landesbank Baden-Württemberg (LBBW), Natixis, Norinchukin Bank, Banco de Sabadell, S.A.. CACIB served as sole underwriter (underwriting 100%), sole bookrunner, sole contingent swap provider, hedge, and social loan coordinator. CACIB, BBVA, Caixabank, CIC, MUFG, and SMBC were primary lenders, each contributing between €70 million EUR to €75 million USD. BOC, BIC-BRED, Helaba, KEB Hana, KfW-IPEX, LBBW, Natixis, Nochu, and Sabadell each contributed approximately €33 million EIR. 11 institutional investors contributed to €600 million tranche via about 40 investment vehicles: AG Insurance, Allianz, BlackRock Inc., CIC Private Debt, Generali (Infranity), IFM Investors, La Banque Postale Asset Management (LBP AM), MEAG, Rivage Investment, Samsung Life (including a pocket managed by IFM), and Schroders Capital. The project had a total value of €2.69790 billion EUR ($2.82024 billion USD), with Vauban and BYT providing €660 million EUR and €470 million EUR respectively in equity. The proceeds specifically financed the long-term rights of use (IRU) of the FTTH Network, not the fiber network deployment directly. SDFAST would purchase access rights (irrevocable rights of usage (IRU)) from FTTH operators, then lease them to BYT as anchor tenant through a long-term master service agreement and to other operators at a contractual price; BYT and SDFAST entered into a long-term master service agreement that granted SDFAST exclusivity on all BYT FTTH access and ensured minimum revenue levels for SDFAST via rental payments. SDFAST would provide access to FTTH in France's rural and medium areas, while giving BYT and third-party operators access to those areas via the same partner and allow infrastructure operators' the financial resources to co-invest in their FTTH networks by sharing the deployment capex costs. The purpose of the project was to finance and roll-out fiber optics in the medium-dense (AMII / AMEL) and less-dense (PIN) areas of France, with SDFAST's primary role being the acquisition of long-term access rights to FTTH lines from infrastructure operators for use by Bouygues Telecom and other operators. The goal was to deliver FTTH connections to an additional 20 million premises by 2027, 4 million in medium-dense areas and 16 million in less-dense areas.