Bank of China contributes $50 million USD to the $500 million USD revolving loan and letter of credit facility of a $10.8 billion USD syndicated loan for the Rio Grande LNG Phase 1 Project (Linked to Record ID#106031, #106033, and #106034)

Project narrative

On July 12, 2023, a syndicate of 19 banks — including the New York Branch of the Bank of China (BOC) — entered into a $10,800,000,000 USD syndicated senior secured loan agreement with Rio Grande LNG, LLC (RGLNG) — a Texas-incorporated special purpose vehicle (SPV) and wholly-owned subsidiary of Rio Grande LNG Intermediate Holdings, LLC (RGIH), a Delaware-incorporated SPV and joint venture with an economic ownership of NextDecade LNG, LLC, a Delaware-incorporated wholly-owned subsidiary of NextDecade Corporation, a Delaware-incorporated natural gas and LNG company headquartered in Houston, Texas and traded on the Nasdaq Stock Exchange (up to 20.79% stake), GIP V Velocity Acquisition Partners, L.P., a Delaware-incorporated limited partnership managed by American infrastructure investment fund Global Infrastructure Partners (GIP) (a minimum of 46.12% stake), Devonshire Investment Pte. Ltd., a Singapore exempt private company and wholly-owned subsidiary of Singaporean sovereign wealth fund GIC Private Limited (a minimum of 9.85% stake), Global LNG North America Corp., a Delaware-incorporated wholly-owned subsidiary of French multinational energy and oil company TotalEnergies SE (16.67% stake), and MIC TI Holding Company 2 RSC Limited, an Abu Dhabi Global Market Restricted Scope Company (MIC) and wholly-owned subsidiary of Abu Dhabi sovereign wealth fund Mubadala Investment Company PJSC (a minimum of 6.57% stake) — for the Rio Grande LNG Phase 1 Project. This loan was divided into two tranches: a $10,300,000,000 USD construction term loan facility sub-divided into three tranches ($3,000,000,000 USD Tranche A, $750,000,000 USD Tranche B, and $6,550,000,000 USD Tranche) to be disbursed so that Tranche A would have to be fully utilized before Tranche B could be used, and Tranche B would have be fully utilized before Tranche C could be used, with all such tranches ranking pari passu and having identical terms; and a $500,000,000 USD revolving loan and letter of credit facility. Both tranches carried a maturity period of seven years and a final maturity date of July 12, 2030 and an interest rate based on SOFR plus the applicable margin of 2.25% or the base plus the applicable margin of 1.25%, and there were commitments fees on the undrawn amounts of both tranches. The principal of the $10.3 billion USD construction term loan facility was repayable in quarterly installments each March 31, June 30, September 30, and December 31, beginning on the first such quarterly payment date to occur on or after the date 90 days after the project completion date. The $500 million USD revolving loan and letter of credit facility was required to be reduced to $0 USD for a period of five consecutive business days at least once every calendar year after project completion, with the principal amount of all revolving and any unreimbursed revolving letter of credit disbursements due on the final maturity date. This loan was secured on (i.e. collateralized against), among other things, a first priority lien on real property and a cash collateral account with Mizuho Bank (USA) serving as collateral agent. The agreement included financial covenants such as that interest rates for a minimum of 75% of the projected principal amount of senior secured debt outstanding be hedged or have fixed interest rates and that the borrower maintain historical debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the first principal payment date and negative pledges. BOC NY Branch committed $298,547,787.91 USD to Tranche A, $60,809,357,26 USD to Tranche B, and $531,068,386.74 USD to Tranche C; $890,425,531.91 USD total to the $10.3 billion USD construction term loan facility tranche, as captured by Record ID#106031. In addition to BOC NY Branch, the following lenders contributed the respective amounts to the $10.3 billion USD construction term loan facility: Abu Dhabi Commercial Bank PJSC (ADCB) ($186,744,754.99 USD to Tranche A; $41,250,125.67 USD to Tranche B; $360,251,097.55 USD to Tranche C; $588,245,978.21 USD in total); Arab Petroleum Investments Corporation (APICROP) ($15,410,958.90 USD to Tranche B; $134,589,041.10 USD to Tranche C; $150,000,000 USD in total); the New York Branch of Banco Santander, S.A. ($373,489,509.97 USD to Tranche A; $76,335,867.79 USD to Tranche B; $666,666,578.65 USD to Tranche C; $816,666,578.65 USD in total); Clifford Capital Pte. Ltd. (CCPL) ($10,273,972.60 USD to Tranche B; $89,726,027.40 USD to Tranche C; $100,000,000 USD in total); HSBC Bank USA, N.A. ($186,744,754.98 USD to Tranche A; $38,681,632.52 USD to Tranche B; $337,819,590.7 USD to Tranche C; $563,245,978.2 USD in total); Intesa Sanpaolo S.p.A. ($373,489,509.97 USD to Tranche A; $72,226,278.75 USD to Tranche B; $630,776,167.69 USD to Tranche C; $1,076,491,956.41 USD in total); JPMorgan Chase Bank, N.A. ($248,993,006.65 USD to Tranche A; $55,000,167.56 USD to Tranche B; $480,334,796.73 USD to Tranche C; $784,327,970.94 USD in total); KfW IPEX Bank GmbH ($20,547,945.21 USD to Tranche B; $179,452,054.79 USD to Tranche C; $200,000,000 USD in total); the New York Branch of Kookmin Bank ($15,410,958.90 USD to Tranche B; $134,589,041.10 USD to Tranche C; $150,000,000 USD in total); Mizuho Bank, Ltd. ($373,489,509.97 USD to Tranche A; $72,226,278.75 USD to Tranche B; $630,776,167.69 USD to Tranche C; $1,076,491,956.41 USD in total); MUFG Bank, Ltd. ($373,489,509.97 USD to Tranche A; $72,226,278.75 USD to Tranche B; $630,776,167.69 USD to Tranche C; $1,076,491,956.41 USD in total); National Bank of Canada ($30,821,917.81 USD to Tranche B; $269,178,082.19 USD to Tranche C; $300,000,000 USD); the Houston Agency of Riyad Bank ($10,273,972.60 USD to Tranche B; $89,726,027.40 USD to Tranche C; $100,000,000 USD in total); Royal Bank of Canada (RBC) ($248,993,006.65 USD to Tranche A; $50,890,578.52 USD to Tranche B; and $444,444,385.77 USD to Tranche C; $744,327,970.94 USD in total); Standard Chartered Bank ($186,744,754.98 USD to Tranche A; $41,250,125.67 USD to Tranche B; $360,251,097.55 USD to Tranche C; $588,245,978.2 USD in total); the Houston Branch of the Bank of Nova Scotia (Scotiabank) ($149,273,893.96 USD to Tranche A; $30,404,678.63 USD to Tranche B; $265,534,193.37 USD to Tranche C; $445,212,765.96 USD in total); Korea Development Bank (KDB) ($20,547,945.21 USD to Tranche B; $179,452,054.79 USD to Tranche C; $200,000,000 USD in total); and the New York Agency of United Overseas Bank Limited ($15,410,958.90 USD to Tranche B and $134,589,041.10 USD to Tranche C; $150,000,000 USD in total). BOC NY Branch committed $50,000,000.00 USD to the $500 million USD revolving loan and letter of credit facility, as captured by Record ID#106032. In addition to BOC NY Branch, the following lenders contributed the respective amounts to the $10.3 billion USD construction term loan facility: the New York Branch of Banco Santander ($60,000,000.00 USD), HSBC Bank USA ($25,000,000.00 USD), Intesa Sanpaolo ($100,000,000.00 USD), Mizuho Bank ($100,000,000.00 USD), MUFG Bank ($100,000,000.00 USD), RBC ($40,000,000.00 USD), and the Houston Branch of Scotiabank ($25,000,000.00 USD). MUFG Bank served as administrative agent. Mizuho Bank (USA) as collateral agent. MUFG bank served as revolving letter of credit issuing bank. BOC NY Branch, ADCB, Banco Santander NY Branch, HSBC Bank USA, Intesa Sanpaolo NY Branch, JPMorgan Chase Bank, Mizuho Bank, MUFG Bank, RBC, and Standard Chartered Bank served as coordinating lead arrangers and bookrunners. Banco Santander NY Branch, BOC NY Branch, Intesa Sanpaolo NY Branch, JPMorgan Chase Bank, Mizuho Bank, MUFG Bank, and RBC served as global coordinators. ADCB and BOC NY Branch served as regional coordinators. ADCB, Banco Santander NY Branch, BOC NY Branch, Intesa Sanpaolo NY Branch, Mizuho Bank, and MUFG Bank served as syndication agents. HSBC Bank USA and Mizuho Bank served as documentation agents. Houston Branch of Scotiabank served as coordinating lead arranger. National Bank of Canada served as joint lead arranger. KfW IPEX-Bank and KDB served as arrangers. APICORP, the New York Branch of Kookmin Bank, and the New York Agency of UOB served as senior managing agents. The proceeds of the $10.3 billion USD construction term loan facility were to be used solely to finance partially the design, engineering, development, procurement, construction, installation, testing, completion, ownership, operation and maintenance of the Rio Grande LNG Phase 1 train facilities as well to pay certain fees and expenses associated with the credit agreement and to fund the debt service reserve account for it for up to an amount equal to six months of scheduled debt service. The proceeds of the $500 million USD revolving loan and letter of credit facility were to be used by the borrower to finance certain working capital requirements of it. Furthermore, on July 12, 2023, a syndicate of 15 banks — including BOC and the Industrial and Commercial Bank of China — entered into a $800.00 million USD syndicated senior secured construction term loan facility agreement with RGLNG for the Rio Grande LNG Phase 1 Project. This loan carried a maturity period of seven years and a final maturity date of July 12, 2030 and an interest rate based on SOFR plus the applicable margin of 2.25% or the base plus the applicable margin of 1.25%. This loan was repayable in quarterly installments each March 31, June 30, September 30, and December 31, beginning on the first such quarterly payment date to occur on or after the date 90 days after the project completion date. There were commitments fees on the undrawn amount of the loan. The agreement included financial covenants such as that interest rates for a minimum of 75% of the projected principal amount of senior secured debt outstanding be hedged or have fixed interest rates and that the borrower maintain historical debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the first principal payment date and negative pledges. TotalEnergies Holdings S.A.S. was a party to the loan agreement in which it agreed to provide contingent credit support and pay due amounts under the loan upon demand (a guarantee). 14 lenders, including BOC, committed $46.43 million USD to the loan syndicate, while ICBC committed $150.00 million USD. Record ID#106033 captures BOC's contribution. Record ID#106034 captures ICBC's contribution. In addition to BOC and ICBC, the following lenders contributed to the loan syndicate: ADCB, HSBC, Intesa Sanpaolo, JPMorgan, KfW IPEX-Bank, KDB, Mizuho Bank, MUFG Bank, National Bank of Canada, RBC, Banco Santander, and Standard Chartered Bank. MUFG Bank served as administrative agent. The proceeds of the $800 million USD construction term loan facility were to be used solely to finance partially the design, engineering, development, procurement, construction, installation, testing, completion, ownership, operation and maintenance of the Rio Grande LNG Phase 1 train facilities as well to pay certain fees and expenses associated with the credit agreement and to fund the debt service reserve account for it for up to an amount equal to six months of scheduled debt service. In addition to the bank debt, MUFG and RBC arranged a 10-year $700 million USD senior secured notes. On September 15, 2023, RGLNG obtained a $356 million USD senior loan from a group of lenders with a maturity period of 10 years (final maturity date in July 2033) and a fixed interest rate of 6.72%, ranking pari passu to the existing loans. The new loan reduced commitments outstanding under the existing debt facilities from $11.1 billion USD to $10.8 billion USD. The purpose of the $18.4 billion USD Rio Grande LNG Phase 1 Project was to construct three liquefied natural gas (LNG) trains with an annual capacity of 17.6 million tons annually and a LNG export facility in Brownsville, Cameron County, Texas, along the Gulf Coast on a 983 acre property. Rio Grande LNG would be supplied with natural gas from the proposed 137-mile long Rio Bravo Pipeline. In addition to constructing the LNG facilities, the project included dredging for the Brazos Island Harbor Channel Improvement Project, conservation of more than 4,000 acres of wetland and wildlife habitat area, and the installation of utilities of approximately $600 million USD. Rio Grande LNG Phase 1 had 16.2 million tons of LNG annually under long-term sale and purchase agreements with TotalEnergies, Shell NA LNG LLC, ENN LNG Pte Ltd, Engie S.A., ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading S.A., and Itochu Corporation. Rio Grande LNG was envisioned as multi-phase a 27 million-ton project, with planning for a fourth and five LNG train. NextDecade committed to reducing 90% of the project’s carbon dioxide emissions (CO2) emissions through planned carbon capture and storage projects. This was the largest greenfield energy project financing in American history. It was also largest privately funded infrastructure project in Texas ever. The project was expected to improve European gas security and offer Asian customers a less-carbon intensive source of energy. Federal Energy Regulatory Commission (FERC) issued approval for the project in December 2019. In February 2020, the U.S. Department of Energy issued approval for the terminal (among others) to ship to LNG to countries that did not have free trade agreements with the United States. The COVID-19 pandemic and declines in the global price of LNG , among other factors, delayed development for several years. The final investment decision (FID) on the project was made on July 12, 2023, with Global Infrastructure Partners (GIP), GIC, Mubadala Investment Company (Mubadala), and TotalEnergies entering into a joint venture with NextDecade Corporation for the project, with $5.9 billion USD of financial commitments from GIP, GIC, Mubadala, and Total. Bechtel Energy, Inc. was the engineering, procurement, and construction (EPC) contractor for the project under a lump-sum turnkey EPC contract for $12.0 billion USD. RPLNG issued the notice to proceed (NTP) for the project on July 12, 2023. The officially groundbreaking ceremony was held on October 3, 2023. The first commercial delivery from Train 1 was expected for the third quarter of 2027, from Train 2 for the second quarter of 2028, and from Train 3 for the third quarter of 2028. Commercial operations was expected for October 2028. As of May 2024, the project was 18% completed. This project was the source of controversy and opposition. After FERC project approval in 2019, lawsuits were filed against the project (and other LNG terminals) by local residents, the neighboring city of Port Isabel, Texas, and the Sierra Club, with claims that the project failed to avoid or mitigate negative impacts to wetlands, that FERC's socioeconomic and environmental justice studies were flawed, that the project would create safety and environmental concerns, impact local fishing, threaten wildfire, hurt tourism, create air pollution, otherwise negatively impact the predominantly Latino population of the project, and endanger the wildcat population. While federal courts did find that FERC's environmental justice and climate impacts did not go far enough, they declined to stop the project. Other opponents included members of the Carrizo/Comecrudo Tribe of Texas. Attempts to stop the project through legal action and pressure on insurance underwriters and financiers have continued since. Assessed problems included the estimated 163 million tons of CO2 emissions from Rio Grande and methane leaks from the project, despite its claims of being one of the cleanest LNG projects in the world (such claims were also skeptical). Half of the proposed Rio Grande sites were located in wetlands, with coastal grasslands and native forests to be removed for construction, with the terminal site situated opposite the Bahia Grande Unit of the Laguna Atascosa National Wildlife Refuge which were expected to be endangered by pollution including light and air ones and traffic. The wetlands include habitat for the endangered ocelot. Rio Grande LNG is also located next to the Garcia Pasture, which is sacred to the Carrizo Comecrudo Tribe with indigenous artifacts or burial grounds possibly present, but no surveys were carried out before construction began. According to local civil society, no Free, Prior, and Informed Consent (FPIC) was ever granted. The heavy poverty and high proportion of Latinos in the area, with a disproportionate health impact feared. The local commercial fishing, shrimping, and ecotourism industries were feared to be negatively impacted by air and water pollution from the project. Lastly, the Rio Grande LNG plant is located nine miles from a SpaceX rocket launch site. In April 2023, SpaceX launched its Starship rocket, which exploded and scattered debris up to areas 6.5 miles away, with eight out of 15 protoypes also exploding. Rio Grande LNG claimed there was a 1-in-100,000 chance of launch debris striking areas of the construction site, which could cause major damage, but this result was based on rockets smaller than Starship.