Bank of China contributes €89.42 million EUR to the €1.073 billion EUR term loan tranche of a €1.26 billion EUR syndicated loan for the 731.5 MW Borssele III and IV Offshore Wind Farms Project

Project narrative

On June 28, 2018, financial close was reached on a deal in which a syndicate of 12 banks — including the Bank of China (BOC) and the Industrial and Commercial Bank of China (ICBC) — entered into a €1.260 billion EUR ($1.45685 billion USD) syndicated loan agreement with Blauwwind II C.V. — a Netherlands-incorporated special purpose vehicle (SPV) jointly owned by Swiss private equity firm Partners Group Holding AG (45% equity stake), Royal Dutch Shell plc (20% equity stake), Diamond Generating Europe B.V. (DGE-NL), a Netherlands-incorporated wholly-owned subsidiary of Diamond Generating Europe Limited (DGE), a wholly-owned subsidiary of Mitsubishi Corporation (15% equity stake), Dutch state-owned utility Eneco Groep N.V. (10% equity stake), and Van Oord N.V. (10% equity stake) — for the 731.5 MW Borssele III and IV Offshore Wind Farms Project. This loan was divided into three tranches: a €1.073 billion EUR ($1.24063 billion USD) senior term loan tranche with a maturity period of 20 years and six months (20.5 years), a final maturity date of December 31, 2038, and an interest rate of EURIBOR plus an initial margin of 155 basis points (bps) for 2.5 years, then a margin of 135 bps for four years, then a margin of 145 bps for four years, then a margin of 155 bps for five years, and finally a margin of 175 bps to maturity; a €88.00 million EUR ($101.75 million USD) decommissioning letter of credit tranche with a maturity period of 20.5 years and a final maturity date of December 31, 2038; and a €99.00 million EUR ($114.47 million USD) contractor letter of credit tranche with a maturity period of two years and six months (2.5 years) and a final maturity date of December 31, 2020. The proceeds were to be used by the borrower for the construction and development of the Borssele III and IV Offshore Wind Farms. In addition to BOC and ICBC, the following lenders contributed to the loan syndicate: ABN AMRO Bank N.V., Bank Nederlandse Gemeenten (BNG), BNP Paribas Fortis S.A./N.V., ING Bank N.V., MUFG Bank, Ltd., Mizuho Bank, Ltd., Coöperatieve Rabobank U.A. (Rabobank), Sumitomo Mitsui Banking Corporation Group (SMBC Group), Sumitomo Mitsui Trust Bank, Limited (SMTB), and Société Générale S.A. (SocGen). Each lender served as a mandated lead arrangers. Each lender contributed €89.42 million EUR ($103.39 million USD) to the €1.073 billion EUR term loan tranche. Record ID#104875 captures BOC's contribution. Record ID#104876 captures ICBC's contribution. The Dutch lenders arranged and provided €88 million EUR decommissioning letter of credit tranche and the €99 million EUR contractor letter of credit tranche. The proceeds were to be used by the borrower to construct and operate the Borssele III and IV offshore wind farms located within the Borssele Wind Farm Zone (BWFZ) 22 kilometers off the coast of Zeeland on the southern border of the Netherlands' Exclusive Economic Zone (EEZ) in the North Sea; Borssele III was 71.4 square kilometers in size and IV was 74.6 square kilometers in size. The farm would consist of 77 V164 9.5 MW wind turbines with a rotor diameter of 164 meters and a monopole shaft produced by MHI Vestas (the first project to commitment to do so) with a total installed capacity of 731.5 MW, enough to power 825,000 households. It also included an offshore substation, Borssele Beta. The wind turbines were connected to the substation through 66 kV cables, where the electricity was then transmitted via an 220kV export cable to the onshore substation, which the power was converted to 380 kV before feeding into the national electricity grid. The project had a cost of €1.3 billion EUR, with the Government of the Netherlands providing a €178.00 million EUR ($205.81 million USD) grant in addition to the senior debt. At the time of close, this was the largest ever project finance of a greenfield offshore wind farm to have made it to financial close. This was reportedly the first time BOC or ICBC were primary financiers on a European greenfield offshore wind farm. On November 14, 2017, the European Investment Bank (EIB) approved the issuance of a loan to Blauwwind II C.V. for the project. However, EIB was pushed out by relationship banks and other competitors during syndication. On December 12, 2016, the Netherlands Enterprise Agency (NVO) awarded the right to develop, construct, operate, and then decommission the 740 MW Borssele III and IV wind farm project parcels to the Blauwwind II consortium — then consisting of MHI Vestas and Van Oord — under a 30-year lease assuming a 25-year operational life after construction with a bid of €54.50 EUR ($63.53 USD) per MWh; during the first 15 years of operation, the wind farm would receive a guaranteed price of €54.49 EUR per MWh under the Stimulering Duurzame Energieproductie / Stimulation of Sustainable Energy Production (SDE+) subsidy scheme of the Government of the Netherlands, after which the subsidy would end and the power would be sold at prevailing rates in the wholesale power market. Shell and Eneco signed 15-year Power Purchase Agreements (PPAs) to each purchase 50% of the power generated by the wind farm. Van Oord was responsible for the "Balance of Plant" for the project, namely the engineering, procurement, and construction of the foundations and inter-array cables. TenneT was responsible for the design and construction of the offshore substation Borssele Beta. MHI Vestas was responsible for the supply and maintenance of the wind turbines. Sif Holding won a contract in April 2018 to construct the 77 monopiles for the wind farm. Mott MacDonald was contracted to provide technical advisory and construction and operation monitoring services for the project. In January 2018, Partners Group agreed to acquire a 45% stake in the project for about €300 million EUR ($375 million USD) from the project sponsors at the time (Shell (40%); DGE (15%); Eneco (20%); and Van Oord (10%). The sale was completed on June 26, 2018. Construction was scheduled to begin in the fourth quarter of 2019 with commercial production expected for early 2021. Construction began in 2019. On August 7, 2020, first power was generated. On February 18, 2021, the project reached full capacity and went into operations.