ICBC contributes to a $2 billion USD syndicated loan to PPG Industries to finance its acquisition of all the issued and outstanding stock of Tikkurila Oyj

Project narrative

On February 19, 2021, a syndicate of 27 banks — including the New York Branch of the Industrial and Commercial Bank of China (ICBC) — entered into a $2,000,000,000 USD syndicated Term Loan Credit Agreement with PPG Industries, Inc. — a Pennsylvania-incorporated supplier of paints, coatings, and specialty materials headquartered in Pittsburgh, Pennsylvania and listed on the New York Stock Exchange (NYSE) — to finance its acquisition of all the issued and outstanding stock of Finnish paint company Tikkurila Oyj. This loan was unsecured and carried a maturity period of three years from the closing date. The loan was available for draw down in 12 installments in either U.S. dollars or in euros, with dollar draw downs carrying an interest rate of either a eurocurrency rate (LIBOR) plus a margin based on the borrower’s public debt rating, ranging from 0.750% to 1.250% per annum (PPG's rating was A3 at time of signing, so the margin would be 100 basis points (bps)), or a base rate plus a margin based on the borrower's public debt rating, ranging from 0.000% to 0.250% per annum and with euro draw downs carrying an interest rate based on the eurocurrency rate plus a margin based on the borrower’s public debt rating, ranging from 0.750% to 1.250% per annum. The loan also contained a ticking fee on the daily maximum unused term loan commitments, ranging from 0.060% to 0.125% per annum depending on the borrower's public debt rating (PPG's rating was A3 at time of signing, so the ticking fee would be 9 basis points (bps)). The loan included usual and customary restrictive covenants. The loan featured a financial covenant to require the borrower to maintain a ratio of Total Indebtedness to Total Capitalization of 60% or less; provided, that for any fiscal quarter in which the borrower has made an acquisition for consideration in excess of $1 billion USD and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65%. In addition to ICBC NY Branch, the following lenders contributed to the loan syndicate: BNP Paribas S.A., PNC Bank, National Association, Citibank, N.A., MUFG Bank, Ltd., the New York Branch of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), the New York Branch of Banco Santander, S.A., the Bank of America, N.A., Goldman Sachs Bank USA, HSBC Bank USA, N.A., the New York Branch of Intesa Sanpaolo S.p.A., Mizuho Bank, Ltd., Société Générale S.A. (SocGen), Sumitomo Mitsui Banking Corporation (SMBC), TD Bank, N.A., U.S. Bank National Association, Wells Fargo Bank, N.A., Australia and New Zealand Banking Group (ANZ), the Finland Branch of Danske Bank A/S, the Dublin Branch of ING Bank N.V., Morgan Stanley Bank, N.A., Skandinaviska Enskilda Banken AB (SEB), Standard Chartered Bank PLC, the Bank of New York Mellon, the Huntington National Bank, the Northern Trust Company, Truist Bank, and the New York Branch of UniCredit Bank AG. BNP Paribas served as administrative agent. PNC Bank, National Association served as syndication agent. BNP Paribas Securities Corp. and PNC Capital Markets LLC served as co-lead arrangers and co-bookrunners. Citibank, N.A. and MUFG Bank, Ltd. served as co-lead arrangers and co-documentation agents. The proceeds were to be used by the borrower to finance cash consideration for its pending acquisition of up to all of the equity interests of Tikkurila Oyj, pursuant to a cash tender offer and to pay related fees, costs and expenses on the closing date, as well as for working capital and general corporate purposes up to December 31, 2021. On December 18, 2020, PPG Industries entered into a definitive agreement to acquire all the issued and outstanding stock of Tikkurila in an all-cash transaction for €25.00 EUR per share, approximately €1.1 billion EUR in total with a tender offer to open on or around January 18, 2021 and to expire on or around March 12, 2021, pending any extensions. Tikkurila is a public limited liability company organized under the laws of Finland, headquartered in Vantaa, Finland, and traded on Nasdaq Helsinki. It is a leading producer and distributor of decorative paint and coatings with operations in 11 countries; over 80% of its revenue camefrom Finland, Sweden, Russia, Poland, and the Baltic states. Its brands include Tikkurila, ALCRO, Teks, Vivacolor, and Beckers. Tikkurila’s industrial paint business produces paints and coatings for the wood and metal industries, among others. At the time of the acquisition, Tikkurila employed about 2,400 people globally and had sales of about €582 million EUR in 2020. The transaction was expected to close in the second quarter of 2021. On February 4, 2021, PPG announced that it had increased its offer to €34 EUR per share in cash after a rival bid of €27.75 EUR from AkzoNobel. The tender offer, extended, expired on June 4, 2021. The acquisition of Tikkurila was completed on June 10, 2021, with PPG owning 97.1% of the company (including previously owned shares), having acquired 38,711,646 shares via the offer, with the remaining 2.9% to be acquired through a squeeze out process. The squeeze out and acquisition of 100% of Tikkurila's outstanding shares was completed in the fourth quarter of 2021. In June 2021, the borrower drew down $700 million USD, and then in December 2021 drew down another $700 million USD.