Narrative
Full Description
Project narrative
On December 13, 2023, China CITIC Bank Corporation entered into a £17.811 million GBP term loan agreement with Gardner Aerospace Holdings Limited — an England and Wales-incorporated Derby, England-based aerospace component manufacturer wholly-owned by Ligeance Aerospace Technology Co., Ltd., a Chinese multinational aviation manufacturer listed on the Shenzhen Stock Exchange — for refinancing and working capital purposes. This loan carried a maturity period of about one year or less and a final maturity date in 2024 and a fixed interest rate of 6.59%. It carried a repayment schedule of quarterly. This loan was secured by (i.e. collateralized against) a cash security provided by Ligeance Aerospace Technology. The proceeds were used by the borrower for working capital purposes and to refinance and repay £17.8 million GBP of senior debt facilities maturing on December 17, 2023 provided by National Westminster Bank (NatWest). Prior to September 25, 2024, this loan was repaid.
Staff comments
1. In June 2017, Chinese industrial group Shaanxi Ligeance Mineral Resources Co. Limited (SLMR) acquired Gardner Aerospace Holdings Limited, a United Kingdom-based aerospace components (metallic detailed parts) manufacturer and a supplier for Airbus, for £326 million GBP ($422 million USD). This acquisition was completed through a subsidiary called Ligeance Investments Ltd. {{see ID#212220; #212219; and #212223}}. Gardner manufactures structural assemblies and parts for the aerospace industry, such as structures and parts for wing spars and fuselage frames. It has five manufacturing facilities in the United Kingdom and other facilities in France, Poland and India from which it supplies a range of products including door components, welded ramps, wing brackets and wing spars {{see ID#212222}}. 2. At the time of the loan, Sichuan Development Holding Co., Ltd. (SDH) — the wholly state-owned investment arm of the State-owned Assets Supervision and Administration Commission of Sichuan Provincial Government — a significant shareholder in Ligeance, was working on converting its debt into equity in Ligeance, giving it a controlling interest in the company. While the French Government approved that deal in March 2022, the Government of the United Kingdom required governance changes in its October 2022 approval {{see pg.27 of ID#212256}}. Specifically, on October 10, 2022, the United Kingdom Secretary of State for Business, Energy and Industrial Strategy made a final order pursuant to section 26 of the National Security and Investment Act 2021, to come into effect the date the acquisition was completed. While the Secretary for State allowed the acquisition, given that the acquisition would give a Chinese state-owned company control over a U.K. aerospace company, it was considered a national security risk in need of mitigation; specifically, it restricted the sharing of information by Gardner Aerospace Holdings Limited and Gardner Group Limited with SDH or Ligeance Aerospace Technology, put security measures in place, removed representatives of SDH and Ligeance Aerospace Technology from the Board of Gardner Aerospace Holdings, required the appointment of a U.K. Government Observer to the Board of Gardner Aerospace Holdings, and required notification of the transfer of assets out of Gardner Aerospace Holdings or Gardner Group to SDH or Ligeance Aerospace Technology {{see ID#212285}}. The acquisition was completed on December 28, 2023 {{see pg.7 of ID#212270}}. On March 13, 2024, the U.K. Secretary of State varied the final order which came into force on March 13, 2024, keeping the conditions and refining the security requirements {{see ID#212283}}.