ICBC (New York Branch) contributes to debt rescheduling — via a reference rate change — of a $1.25 billion USD syndicated loan to Nutrition & Biosciences to facilitate its acquisition by International Flavors & Fragrances Inc.

Project narrative

On January 17, 2020, a syndicate of 21 banks — including the New York Branch of the Industrial and Commercial Bank of China (ICBC) — entered into a $1,250,000,000 USD syndicated term loan credit agreement with Nutrition & Biosciences, Inc. — a Delaware-incorporated special purpose vehicle (SPV) established and wholly-owned by Delaware-incorporated American multinational chemical company DuPont de Nemours, Inc. to hold its nutrition and biosciences business for transfer — to facilitate its acquisition by International Flavors & Fragrances Inc., a New York-incorporated American specialty ingredients producer headquartered in New York City, New York and listed on the New York Stock Exchange and the Tel Aviv Stock Exchange. This senior unsecured term loan was divided into two tranches: a $625,000,000 USD three-year tranche and a $625,000,000 USD five-year tranche. This loan carried a variable interest rate being either a LIBOR-based rate or a base rate (calculated from on the highest of a prime rate, 0.50% plus the Federal Funds or Rate, or one-month LIBOR plus 1.00%) plus an applicable margin based on International Flavors & Fragrances Inc.'s credit rating from S&P's or Moody's. For the three-year tranche, the margin could range from 0.000% for base rate loans or 0.750% for LIBOR loans if the rating was A+ or A1 to 1.000% for base rate loans or 2.000% for LIBOR loans if it was lower than BBB- or Baa3. For the five-year tranche, the margin could range from 0.000% for base rate loans or 0.875% for LIBOR loans if the rating was A+ or A1 to 1.125% for base rate loans or 2.125% for LIBOR loans if it was lower than BBB- or Baa3. The term loan included a financial covenant requiring International Flavors & Fragrances Inc. to maintain a maximum consolidated leverage ratio of 4.75 to 1.00 until and including the end of the third full fiscal quarter after the closing date of the merger, stepping down to 4.50 to 1.00 until and including the end sixth full fiscal quarter after the merger's closing date, stepping down further to 3.75 to 1.00 until and including the end of the ninth full fiscal quarter after the merger's closing date and stepping down further to 3.50 to 1.00 thereafter. The term loan also included customary affirmative and negative covenants. The funding of the term loan was conditional on the satisfaction of several limited conditions including the accuracy of certain representations and warranties, (the absence of a material adverse effect on the borrower, and the completion of the separation and merger (substantially concurrent with the loan being funded). The term loan commitments would terminate on the consummation of the special cash payment without borrowing under the term loan, the termination of the merger agreement, or March 15, 2021. Following the merger, International Flavors & Fragrances would guarantee the borrower's obligations. Then, following the second merger, Neptune Merger Sub II LLC, a Delaware-incorporated SPV and wholly owned subsidiary of International Flavors & Fragrances, would assume the obligations of the loan, though International Flavors & Fragrances could assume its obligations. Record ID#106657 captures ICBC's contribution. In addition to ICBC, the following lenders contributed to the loan syndicate: Morgan Stanley Bank, N.A., the Cayman Islands Branch of Credit Suisse AG, CoBank, ACB, BNP Paribas S.A., Citicorp North America, Inc., JPMorgan Chase Bank, N.A., Bank of America, N.A., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation (SMBC), Wells Fargo Bank, N.A., Barclays Bank Plc, the Dublin Branch of ING Bank N.V., MUFG Bank, Ltd., U.S. Bank National Association, HSBC Bank USA, N.A., and Standard Chartered Bank plc. Morgan Stanley Senior Funding Inc. served as administrative agent. Credit Suisse served as syndication agent. Morgan Stanley Senior Funding, Credit Suisse Loan Funding LLC, CoBank, ACB, BNP Paribas, Citibank, N.A., and JPMorgan Chase Bank, N.A. served as joint lead arrangers and joint bookrunners. Bank of America, Mizuho Bank, SMBC, and Wells Fargo Bank served as documentation agents. The proceeds were to be used by the borrower to finance a portion of a $7.307 billion USD one-time cash payment to DuPont and payment of fees and expenses associated as part of International Flavors & Fragrances Inc.'s (IFF) merger with the $26.2 billion USD nutrition & biosciences unit of Dupont, which would leave DuPont shareholders with 55.4% of the shares of Nutrition & Biosciences and IFF shareholders would own 44.6%, but IFF would own the entire company. The borrower had already secured a $7.5 billion USD 364-day bridge loan facility for the acquisition, and then reduced the commitments to $6.25 billion USD after the term loan (and then, in September 2020, cancelled the bridge loan after issuing $6.25 million USD in notes). The merger would be conducted via using a tax-efficient structure known as a Reverse Morris Trust, allowing a company to avoid a big tax bill by spinning off a unit that it wants to divest and simultaneously merging it with another company. Nutrition & Biosciences, Inc. was established to hold the nutrition and biosciences business for acquisition, after which all of the issued and outstanding of its common stock would be distributed through an exchange offer, and then merged into Neptune Merger Sub I Inc., a Delaware-incorporated wholly owned subsidiary of IFF, with Nutrition & Biosciences as the surviving corporation. The existing shares of Nutrition & Biosciences common stock would be automatically converted into the right to receive shares of IFF common stock. Soon after the merger, Nutrition & Biosciences would with and into Neptune Merger Sub II LLC, with Merger Sub II being the surviving corporation. The merger agreement was signed on December 15, 2019. Both of the boards of IFF and DuPont unanimously approved the deal. On August 27, 2020, IFF shareholders approved the acquisition. The separation and distribution of Nutrition & Biosciences and then its transfer to IFF was completed on February 1, 2021. On August 25, 2020, 17 lenders of the lending syndicate — including ICBC — entered into an amendment agreement with the borrower for the loan; among other things, the amendment changed the range of the applicable margin for the five-year tranche: the margin could range from 0.125% (an increase of 0.125%) for base rate loans or 1.125% (an increase of 0.250%) for eurocurrency rate loans if the rating was A+ or A1 to 1.375% (an increase of 0.250%) for base rate loans or 2.375% (an increase of 0.250%) for eurocurrency rate loans if it was lower than BBB- or Baa3. Record ID#106662 captures this interest rate adjustment. At the time of the third amendment, the lending syndicate had changed and consisted of the following members: Bank of America, Barclays Bank, BNP Paribas, Citibank, N.A., CoBank, ACB, the Cayman Islands Branch of Credit Suisse, HSBC Bank USA, the Dublin Branch of ING Bank N.V., JPMorgan Chase Bank, Mizuho Bank, Morgan Stanley Bank, MUFG Bank, Standard Chartered Bank, SMBC, U.S. Bank, N.A., and Wells Fargo Bank, N.A.. On March 4, 2021, International Flavors & Fragrances Inc. assumed the debt of Neptune Merger Sub II LLC. On August 4, 2022, the lending syndicate — including ICBC — entered into the second agreement with IFF for the loan, changing the terms of the financial covenant. Then, on March 23, 2023, the lending syndicate — including ICBC — entered into the third and fourth amendments for the term loan with IFF; the third amendment provided relief for the financial covenant through December 31, 2024, while the fourth amendment replace LIBOR with Term SOFR (SOFR plus 0.10%). Record ID#106663 captures this interest rate adjustment. At the time of the fourth amendment, the lending syndicate had changed and consisted of the following members: AgCountry Farm Credit Services, FLCA, AgFirst Farm Credit Bank, American Agcredit, PCA, Bank of America, BNP Paribas, CoBank, ACB, Farm Credit Bank of Texas, Farm Credit Services of America, PCA, HSBC Bank USA, the Dublin Branch of ING Bank N.V., Lord, Abbett & Co. LLC (as investment manager for 10 accounts), Mizuho Bank, MUFG Bank, SMBC, the Seattle Branch of Taiwan Cooperative Bank, U.S. Bank, N.A., and Wells Fargo Bank, N.A..