Bank of China contributes $129 million USD to a $1.295 billion USD syndicated loan for the 1.5 GW Hollandse Kust Zuid Offshore Wind Farm Project

Project narrative

On April 25, 2022, financial close was reached on a deal in which a syndicate of 10 banks — including the Bank of China (BOC) — entered into a $1.295 billion USD (€1.2 billion EUR) syndicated term loan agreement with HKZ Investor Holding B.V. — a Netherlands-incorporated special purpose vehicle (SPV) that is jointly owned by Allianz Capital Partners GmbH (ACP), an investment manager and a wholly-owned subsidiary of German multinational financial services company Allianz SE (51.0% equity stake), and BASF SE, a European multinational chemical company headquartered in Ludwigshafen, Germany and listed on the Frankfurt Stock Exchange and as American Depositary Receipts in the United States (49.0% equity stake) — for the Hollandse Kust Zuid (HKZ) Offshore Wind Farm Project. This loan carried a maturity period of 20 years. This loan was secured by (i.e. collateralized against) a security package. Each lender, including BOC, contributed $129 million USD to the loan syndicate. In addition to BOC, the following lenders contributed to the loan syndicate: DZ Bank AG, Landesbank Hessen-Thüringen (Helaba), ING Bank N.V., Landesbank Baden-Württemberg (LBBW), National Westminster Bank Plc (NatWest), Skandinaviska Enskilda Banken AB (SEB), Sumitomo Mitsui Banking Corporation (SMBC), Société Générale S.A. (SocGen), and Standard Chartered Bank PLC. SEB served as documentation agent and mandated lead arranger. ING Bank served as a lead bank. The proceeds of this holdco-level non-recourse financing were to be used by the borrower to finance BASF and Allianz's minority stake in the construction of the HKZ I, II, III, and IV Offshore Wind Farms via BASF's acquisition of a 49.5% stake in HKZ and then ACP's acquisition of a 51% stake in HKZ Investor Holding, and then construction of the project. The HKZ Offshore Wind Farm Project is a 140-turbine offshore wind farm located in the North Sea 18 kilometers off the Dutch coast, with a total installed capacity of 1.5 GW, producing enough energy to power two million households. The four parcels, I, II, III, and IV, are located in the 235.8 square kilometer Hollandse Kust (zuid) Wind Farm Zone (HKZWFZ) situated offshore west of the the Zuid0Holland (South Holland) and Noord-Holland (North Holland) provinces in water depths between 18 meters and 27 meters, bordered by the operational Luchterduinen wind farm on the northeastern side, a sand extraction area on the northern side, anchorage areas in the northern and southern parts of HKZWFZ, and enclosed by the coastline and main shipping routes of IJmuiden and Rotterdam. Parcel I and II each had a capacity of 350 MW and covered a total area of 115 square kilometers, while III and IV had a total capacity of 750 MW and covered an area of 110 square meters. The turbines were Siemens Gamesa 10.0-193 DD offshore wind turbines with a rated power of 10 MW and a generation capacity of 11 MW, with 94-meter long rotor blades, a diameter of the three-blade rotor of 200-meter, and a 29,300 square meter swept area. The maintenance and operational activities of the HKD were controlled from the port of Ijmuiden. HKD had two offshore transformer platforms, HKZ Alpha and HKZ Beta, each with AC connections of 700 MW; electricity from the turbines would be transmitted to the platforms via 66 kV infield cables, and then stepped up to 220 kV and transmitted via four 550-meter long pipeline sections under the seawall south of the Maasguel channel to an onshore 380kV high-voltage substation at Maasvlakte, from where it would move to the south ring of the TenneT-operated Randstad 380 kV line. HKZ was to be the world's largest offshore wind farm globally and the first large-scale wind farm and first fully merchant offshore wind farm implemented without subsidies. Vattenfall AB owned a 50.5% stake in HKZ. In March 2018, the Government of the Netherlands awarded a tender for the construction and operation of the first two parcels of what became HKZ (Zone Sites I and II) to Chinook C.V., a subsidiary of Vattenfall, in March 2018. In March 2019, initial preparatory works began at the sites. Then, in July 2019, Chinook won the tender for the remaining two parcels (Zone Sites III and IV). Vattenfall made the final investment decision (FID) on the project in June 2020. On June 24, 2021, BASF acquired a 49.5% stake in HKZ from Vattenfall AB via HKZ Investor Holding for €1.6 billion EUR. The acquisition was completed in September 2021. On December 6, 2021, BASF entered into a definitive agreement to sell a 51% stake in HKZ Investor Holding to ACP, which was completed; it gave ACP an effective 25.2% indirect stake in HKZ. Concurrent with the sale agreement, BASF entered into a long-term fixed-price corporate Power Purchase Agreement (C-PPA) for the vast majority of the power generated by by HKZ Investor Holding's 49.5% stake in HKZ. This was the first European C-PPA-backed offshore wind deal. This was reportedly the first time a corporate acquired a major stake in a wind farm to secure its own energy demand. In April 2019, Vattenfall signed a contract with TenneT for offshore grid connection for the first two parcels, and then another contract in April 2020 for the last two parcels. In April 2019, Vattenfall awarded a contract to Seaway 7 for the transportation and installation of 76 monopile foundations and infield cables for I and II. In April 2020, Subsea 7 was contracted for the transportation and installation of monopile foundations and cables. Sif Group was contracted to supply the monopile foundations. Siemens Gamesa Renewable Energy S.A. (SGRE) was responsible for providing the wind turbines. Swire Blue Ocean was selected for wind turbine installation. TenneT subcontracted a consortium of Van Oord and Hellenic Cables for the delivery and installation of sea and land cables for the Alpha platform. LMR Drilling GmbH was subcontracted for horizontal directional drilling for the installation of the cables and platform. Drydocks World constructed the HKZ platforms Alpha and Beta. Petrofac won a contract for offshore grid connections and subcontracted Heerema Marine Contractors to transport and install the HKZ Alpha high-voltage alternating current platform. Prysmian Powerlink and Twentsche Kabelfabriek were contracted for the manufacture and supply of the inter-array cable systems connecting the turbines to the two offshore high-voltage stations. HKZ was expected to become operational in 2023. Construction began in July 2021. In June 2023, the final turbine was installed. On September 29, 2023, the wind farm was officially inaugurated by the King of the Netherlands Willem-Alexander, with full operations expected for 2024. The wind farm went into full operations in 2024.