Narrative
Full Description
Project narrative
On December 9, 2007, the Bank of China (UK) participated in a 7.2 billion euro credit facility to Lafarge S.A., a French cement company. The purpose of the facility was to facilitate Lafarge's purchase of Orascom Building Materials Holding S.A.E., an Egyptian cement company, from Orascom Construction Industries S.A.E. The facility was structured as a multi-tranche term loan and revolving credit facility. The term loan tranches were A1 which consisted of 1.8 billion euros (later reduced to 300 million euros) with a one year maturity; A2 which was 2.3 billion euros with a maturity of two years; and B, C1, C2 worth 3.1 billion euros with a 5 year maturity. Other terms of the tranches are unknown. Syndication on the facility was completed in February 2008. 30 banks participated in the syndication, with Morgan Stanley as the joint lead arranger and mandated lead arranger. BNP Paribas and Calyon were joint lead bookrunners on the financing. Morgan Stanley, BNP Paribas, and Calyon also served as underwriters. Bank of China (UK) contributed to the credit facility, but it is unknown which tranches in which amounts. In 2008, the first tranche was partially refinanced to 1.5 billion euros in 2008. In 2009, Lafarge made several early repayments totalling of 4.9 million euros. As of December 31, 2011, a balance of 768 million euros remained outstanding. The facility includes a financial covenant of a required financial ratio computed as the level of net debt to “operating income before capital gains, impairment, restructuring and other” after adding back the charge for depreciation and amortization of assets. This ratio must be lower than 4 as at December 31, 2008 and June 30, 2009 and lower than 3.75 from December 31, 2009 onwards. The loan was part of a larger set of financing for the Orascom acquisition, consisting of 8.8 billion euros in cash, (of which the facility provided 7.2 billion) and 1.4 billion euros in net debt. The Sawiris family, 60% owners of Orascom Construction Industries, was to invest most of the proceeds of the sale into an 11.4% stake in Lafarge. On December 9, 2007, the purchase went through. Financial close was on January 23, 2008. Lafarge was represented in the purchase by Cleary Gottlieb, and Orascom was advised by Citigroup.
Staff comments
1. Bank of China's specific contribution to the 7.2 billion credit facility is unclear. It is unknown which of the tranches were contributed to, and in what amount. For the time being, AidData makes the assumption that all 30 banks on the facility contributed equal amounts. After splitting 7.2 billion by 30, 240 million is thus coded as the transaction amount. 2. As it is unknown what tranche Bank of China contributed to, AidData has recorded for this record the average maturity of the tranches (2.6 years). 3. Additional banks in the syndicate beyond Morgan Stanley, BNP Paribas, and Calyon are presently unknown. This issue requires further investigation.