Narrative
Full Description
Project narrative
On December 30, 2019, financial close was reached on a deal in which a syndicate of eight banks — including the Bank of China (BOC) — entered into a $574.40 million USD syndicated loan agreement with Gulf Coast Ammonia, LLC (GCA) — a Delaware-incorporated special purpose vehicle (SPV) jointly owned by Starwood Energy Group Global LLC, a private energy infrastructure investment firm based in Greenwich, Connecticut (50% equity stake) and Mabanaft GmbH & Co. KG, a German independent holding and trading company for the energy and chemical sector and a subsidiary of German energy and chemical company Marquard & Bahls AG — for the Gulf Coast Anhydrous Ammonia Plant Project. This loan was divided into three tranches: a $527.28 million USD term loan tranche; a $27.12 million USD letter of credit tranche; and a $20.00 million USD working capital tranche. This loan carried a maturity period of 10 years (or seven years from term loan conversion date), a final maturity date of December 30, 2029, and a variable interest rate of LIBOR plus an initial margin of 225 basis points (bps) until 250 bps from the term loan conversion date to the fifth anniversary of the term conversion date, after which it would be 275 bps. BOC contributed $60.00 million USD to the $527.28 million USD term loan tranche. In addition to BOC, the following lenders contributed to the loan syndicate: CoBank ($82.50 million USD), ING Capital LLC ($53.73 million USD), Intesa Sanpaolo S.p.A. ($53.73 million USD), Natixis ($75.00 million USD), Nomura Holdings ($77.32 million USD), Coöperatieve Rabobank U.A. (Rabobank) ($50.00 million USD), and Société Générale S.A. (SocGen) ($75.00 million USD). BOC did not contribute to the $27.12 million USD letter of credit tranche, which was provided by ING Capital and Intesa Sanpaolo ($13.56 million USD each). BOC did not contribute to the $20.00 million USD working capital tranche, which was provided by ING Capital and Intesa Sanpaolo ($10.00 million USD each). BOC, ING Capital, Intesa, Nomura, Natixis, SocGen, CoBank, and Rabobank served as lead arrangers. The proceeds were to be used by the borrower to finance the construction of a state-of-the-art anhydrous ammonia plant with a production capacity of roughly 1.3 million tons of ammonia per year and maritime facilities in an industrial chemical site with deep-water access and pipeline connectivity located in Texas City, Galveston County, Texas. The plant, which would be the world’s largest single-train ammonia synthesis loop, would purchase hydrogen and nitrogen gases as feedstock (allowing for capital efficiency and reduced air emissions) and would help produce ammonia needed for domestic and global demand for nitrogen-based fertilizers and specialty chemical production. In addition to the debt, the $858 million USD project was financed by $284 million USD in equity from the sponsors. Agrifos Partners LLC was the original developer of the project. Macquarie Capital was a co-sponsor during development of the project, but sold down its equity stake before financial close. It acted as equity arranger, debt arranger and financial adviser on the transaction. GCA signed long-term offtake contracts for the majority of its production capacity, including 500,000 tons from Mabanaft, and long-term agreements for its feedstock with Air Products. The associated marine facilities would be owned and operated by Oiltanking North America. The facility and associated infrastructure was to generate major economic benefits in Galveston County, including more than 40 permanent operations jobs and over 1,000 construction jobs at peak. Hunt, Guillot & Associates, LLC served as the owner's representation and program management. Construction was to begin in early 2020 with commissioning expected in the first half of 2023. Construction began in early 2020. As of early February 2025, construction was ongoing but not completed, with commissioning expected for the second quarter of 2025. There were potential risk factors of this project, with carbon emissions and air pollution risks. Within the three miles of the plant, 61% of the population were people of color and 40% were low income.
Staff comments
1. Vinson & Elkins represented GCA as project counsel and borrower's counsel and advised on all aspects of the development and financing of the project. Starwood Energy was represented by King & Spalding as M&A/PE counsel. Mabanaft was represented by Hogan Lovells US LLP as M&A/Projects counsel. Agrifos was represented by Seward & Kissel LLP as M&A counsel.