China Construction Bank (London) provides a $200 million USD loan to Zhejiang Geely Holding Group to finance the acquisition of Volvo Car Corporation (Linked to Record ID#104955 and #104956)

Project narrative

In late November 2009, a syndicate of at least three banks — including the Bank of China (BOC), China Construction Bank Corporation (CCB), and the Export-Import Bank of China — agreed to offer loans to Zhejiang Geely Holding Group Co., Ltd. (ZGH) — a Chinese privately-owned multinational automotive conglomerate headquartered in Hangzhou largely owned by Chinese entrepreneur Li Shufu that is the parent of Geely Automobile Holdings Limited, which is listed on the Stock Exchange of Hong Kong — to finance its $1.8 billion USD bid for the acquisition of a 100% equity stake in Volvo Personvagnar AB (Volvo Car Corporation) — a Swedish multinational manufacturer of luxury cars headquartered in Torslanda, Gothenburg, Sweden — from Ford Motor Company. Geely Holding sought at least $1 billion USD in loans from Chinese banks to finance the acquisition. On October 28, 2009, Ford named Geely as the preferred buyer of Volvo. On December 23, 2009, all substantive commercial terms for the sale of Volvo to Geely by Ford was finalized. Then, on March 28, 2010, Zhejiang Geely Holding entered into a definitive agreement with Ford Motor Company for Geely Sweden AB — a Sweden-incorporated wholly-owned subsidiary of Geely Sweden Automotive AB, a Sweden-incorporated wholly-owned subsidiary of Geely Sweden Holdings Ab, a Sweden-incorporated wholly-owned subsidiary of China-incorporated Shanghai Geely Zhaoyuan International Investment Co., Ltd., an indirect wholly-owned subsidiary of ZGH — and Mintime North America, LLC — a Delaware-incorporated limited liability company and subsidiary of ZGH — to purchase all the issued and outstanding stock in Volvo Car Corporation from Volvo Personvagnar Holding AB — a Sweden-incorporated subsidiary of Ford — and all the issued and outstanding interests in Volvo Cars of North America, LLC — a Delaware-incorporated limited liability company and the U.S. subsidiary of Ford — for a consideration of $2.7 billion US; Geely paid Ford $1.6 billion USD for the stake and $200 million USD for a credit note, while $900 million USD in working capital for Volvo (i.e. new product investments, launch costs, plant upgrades, general reserves). Ford agreed to supply Volvo with periods, powertrains, stampings, and other vehicle components for a period of time and Geely agreed that Volvo would continue to supply engines, stampings, and other components to Ford for a period of time. In or around March 2010, the Bank of China (BOC) entered into a $1 billion USD loan agreement with Zhejiang Geely Holding Group Co., Ltd. to finance the acquisition of Volvo. This loan carried a maturity period of five years. Record ID#104955 captures BOC's loan. In or around March 2010, the Export-Import Bank of China entered into a $500 million USD loan agreement with Zhejiang Geely Holding Group to finance the acquisition of Volvo. This loan carried a maturity period of five years. Record ID#104956 captures China Eximbank's loan. Then, in or by early August 2010, China Construction Bank (London) Limited (CCB London) issued a $200 million USD acquisition finance facility to Geely Sweden AB to finance the acquisition of Volvo. This facility was secured by (i.e. collateralized against) a pledge over the shares of the ultimate holding companies of Volvo. Record ID#104957 captures CCB London's loan. In addition to the loans from BOC, China Eximbank, and CCB London, Geely Automobile Holdings Limited and the Government of Gothenburg Municipality — the city in Sweden where Volvo is headquartered — issued loans to Geely Holding worth $400 million USD from $2.1 billion USD in debt financing for the acquisition. Bohai Industrial Investment Fund, a private equity fund backed by the Chinese Government, was in talks in November 2009 to support the bid. Geely planned to allow Volvo to retain its independence and to not interfere in Volvo’s day-to-day management, to continue manufacturing Volvo cars in Europe, and planed to retain the existing management team. Geely planned to integrate Volvo’s patented technologies into its vehicles that it would pay the latter, set up a Volvo plant in China with a capacity of 300,000 units per annum in China and increase Volvo's sales in China to between 200,000 to 300,000 units (up from its only 30,000 cars sold in 2009). The headquarters would remain Gothenburg and the factories in Sweden and Belgium would remain. The acquisition of Volvo was completed on August 2, 2010. At the time of the acquisition, Volvo had operated at a loss of $934 million USD in 2009; Volvo was larger and more valuable than Geely. Some analysts questioned the wisdom of the acquisition, as Volvo's premium cars would compete with Geely's and that the management discrepancy of Volvo, being a very large company, would cause issues; still, Geely expected that expanding in China would return Volvo back to profitability. Volvo is widely seen as an important part of not only to Swedish economy and its employment thousands of workers, but its national identity and mythology as an example of its non-sense practicality. The acquisition by Geely was widely accepted by Volvo's executives and labor leaders as Ford had run the company very poorly. Gothenburg treated Volvo under Geely ownership generously, providing a major discount to land for a research center (cancelling the construction of a school on said land) and otherwise helped Geely navigate Swedish bureaucracy. After continuing losses under Geely ownership, in 2013, Volvo returned to profit, with a net profit of kr.960 million SEK ($148 million USD) with sale gains in China. By 2020, Volvo's value had risen tenfold. In 2020, Geely Holding announced a plan to merge Volvo Car Corporation with Geely Holding, creating a global company and ending Volvo's independent existence. This caused a major national debate in Sweden, with fears that Volvo would move headquarters to China, be listed on the Stock Exchange of Stock Exchange, move more production, to China from Sweden, and rename the company to Volvo-Geely. Concurrent was increasing national security and foreign influence concerns amongst Swedish officials from increased ties with China, from sharing dual-use technology with the Chinese Government to attempting to influence Swedish media and politicians. The merger plans were scrapped and in late 2021 Geely announced it planned to launch an initial public offering (IPO) of Volvo on the Nasdaq Stockholm Stock Exchange.