Bank of China provides $480 million loan to Bohai Leasing for its acquisition of 80% equity stake in Cronos Limited

Project narrative

In November 2011, China Development Bank (CDB) issued a $1.335 billion loan to HNA Group (International) Company Limited — a wholly-owned subsidiary of HNA Group — to facilitate its acquisition of a 100% equity stake in GE Seaco SRL (a container leasing company headquartered in Barbados) for $2.2 billion (as captured via Record ID#105645). The loan’s estimated borrowing terms include a 10-year maturity and a 5% interest rate. The acquisition was completed in December 2011. At the time of the acquisition, GE Seaco SRL was the world’s fifth-largest container leasing company and HNA Group’s ultimate objective was to make GE Seaco SRL the world’s largest container leasing company by the number of cost-equivalent units. Then, in 2013, HNA Group (International) Company Limited 2011 decided to sell GE Seaco SRL to Bohai Leasing Co., Ltd. (a Chinese leasing and financial services company and subsidiary of HNA Capital Group Co., Ltd. In order to facilitate the acquisition, Bohai Leasing Co., Ltd. secured an RMB 4 billion loan commitment letter from China Merchants Bank on September 13, 2013 (as captured via Record ID#105646). Then, on November 11, 2013, China’s National Development and Reform Commission (NDRC) approved the acquisition. Then, on November 22, 2013, the Ministry of Commerce (MOFCOM) of the People's Republic of China approved the transaction. On December 27, 2013, the China Securities Regulatory Commission (CSRC) approved the transaction. On the same day, Bohai Leasing Co., Ltd., through its offshore subsidiary — Global Sea Containers Ltd — completed its acquisition of the entire (100%) equity stake in GE Seaco SRL from Global Sea Containers Two SRL. At the time of the acquisition, GE Seaco SRL owned and managed over 870,000 20-foot equivalent units. Then, in January 2015, Bank of China (BOC) entered into a $480 million loan agreement with Bohai Leasing Co., Ltd. — a Chinese aircraft leasing company listed on the Shenzhen Stock Exchange with Chinese conglomerate HNA Group Co., Ltd. via HNA Capital Group Co., Ltd. as its largest shareholder — for its acquisition of an 80% equity stake in Cronos Limited (as captured via Record ID#105825). This loan carried a maturity of five years. Cronos Limited is a Bermuda-incorporated cargo container lessor headquartered in San Francisco, California. It has 20 leasing and sales offices in 18 countries. Cronos Limited leases dry, refrigerated, tank and specialized intermodal container equipment to users globally across a number of industries. It offers design and procurement services for companies needing specialized built-to-order container equipment and manages equipment leasing investment programs on behalf of third-party owners. At the time of the acquisition, it owned $2.5 billion in container equipment and a diversified fleet. It was the world's eight biggest container leasing company. In July 2014, Bohai Leasing Co., Ltd. signed a memorandum of understanding with Cronos Holdings Company Ltd. — a vehicle for funds managed by Kelso & Co. (including Kelso Fund VIII ) and Transportation Capital Group — for the acquisition of a 80% equity stake in Cronos Limited, with another investor agreeing to purchase the remaining 20% equity stake. In November 2014, Global Sea Containers Ltd. — an offshore wholly-owned subsidiary of Bohai Leasing via Seaco Limited — signed an agreement with Cronos Holding to purchase the 80% equity stake in Cronos Limited for a consideration of around $610 million, including Bohai taking on $25.88 million of the company's debt. The acquisition was completed on January 20, 2015. The acquisition of Cronos made Seaco the largest container leasing company in the world by Container Equivalent Units (CEUs).