Narrative
Full Description
Project narrative
On November 25, 2016, a syndicate of five banks — the New York Branch of Agricultural Bank of China (ABC), the New York Branch of the Bank of China (BOC), the Beijing Haidian District Branch of Postal Savings Bank of China (PSBC), East West Bank, and the State Bank of India (SBI) — entered into a $4 billion USD syndicated term loan agreement with GCL Investment Management, Inc. — a Delaware-incorporated special purpose vehicle (SPV) and investment vehicle and a wholly-owned subsidiary of Tianjin Tianhai Investment Company, Ltd. (later renamed HNA Technology Co., Ltd.), a Chinese shipping and logistics company and the Shanghai Stock Exchange-listed subsidiary of HNA Technology Group Co., Ltd. (formerly HNA Logistics Group Co., Ltd.), a subsidiary of HNA Group Co., Limited, a Chinese conglomerate headquartered in Haikou, Hainan — to facilitate Tianjin Tianhai Investment’s acquisition of a 100% equity stake in Ingram Micro Inc. This loan carried a maturity period of seven years and was drawn down on December 2, 2016, with a first principal repayment installment of $450 million USD originally scheduled for December 5, 2017 (a grace period of approximately one year), then second principal repayment installment of $350 million USD originally scheduled for December 2, 2018, the third principal repayment installment of $400 million USD originally scheduled for December 2, 2019, the fourth principal repayment installment of $600 million USD originally scheduled for December 2, 2020, the fifth principal repayment installment of $600 million USD originally scheduled for 2021, the sixth principal repayment installment of $800 million USD originally scheduled for 2022, and the seven and final principal repayment installment of $800 million USD originally scheduled for 2023 at maturity. The lending syndicate held the right to demand immediate repayment of all remaining loan principal due to delayed payment. 28 pledge guarantors, including HNA Group Co., Ltd., Tianjin Tianhai Investment Company, Grand China Air Co., Ltd., HNA Capital Group Co., Ltd., and HNA Logistics Group Co., Ltd. (later known HNA Technology Group Co., Ltd.), issued guarantees for the loan. This loan was secured by (i.e. collateralized against) a pledge from Tianjin Tianhai Investment Company, Ltd. of its 100% equity stake in GCL Investment Management, Inc. (and through it, Ingram Micro Inc.), a one-year deposit certificate of RMB 1.482 billion issued by Haikou Haixiu Branch of ABC pledged by Hainan Airlines Holding Co., Ltd. with the Hainan Branch of ABC as the first priority beneficiary, a RMB 531,531,796 equity interest in Xiangpeng Airlines (Lucky Air) pledged by Hainan Airlines Holding Co., Ltd., and a five-year deposit certificate of RMB 101 million issued by the Haikou Southern Airlines Branch of ABC pledged by Hainan Airlines Holding Co., Ltd. The New York Branch of ABC served as administrative agent and offshore collateral agent. The Hainan Branch of ABC served as onshore collateral agent. ABC, BOC, and PSBC Served as joint account managers and joint lead arrangers. ABC contributed $1.5 billion USD, as captured by Record ID#107396. BOC contributed $1.5 billion USD, as captured by Record ID#107397. PSBC contributed $700 million USD, as captured by Record ID#107398. SBI and East West Bancorp together contributed the remaining $300 million USD. The borrower failed to make the first principal repayment installment of $450 million USD on its due date of December 5, 2017. It only made the payment on March 2, 2018. The borrower failed to pay the second principal repayment installment of $350 million USD of the syndicated loan on its originally scheduled due date of December 3, 2018. Then, on January 26, 2019, the lending syndicate entered into an agreement with the borrower to extend the second principal repayment installment by nine months (0.75 years) to September 5, 2019. However, the borrower failed to make the $350 million USD second principal repayment installment or the $400 million USD third principal repayment installment due on December 2, 2019. Record ID#107416 captures ABC's contribution to the debt rescheduling. Record ID#107417 captures BOC's contribution to the debt rescheduling. Record ID#107418 captures PSBC's contribution to the debt rescheduling. Then, on December 25, 2019, the lending syndicate entered into an agreement with the borrower to extend the second principal repayment installment and the third principal repayment installment ($750 million USD total) by five months (~0.416 years) to May 5, 2020. Record ID#107419 captures ABC's contribution to the debt rescheduling. Record ID#107420 captures BOC's contribution to the debt rescheduling. Record ID#107421 captures PSBC's contribution to the debt rescheduling. The borrower again failed to make either of the repayments. Analysts notes that the loan was technically in default (again), though the lenders agreed to principle to delay repayment. Two months prior, in March 2020, the Hainan Provincial People's Government in China took over control of HNA Group amid financial woes and credit issues stemming from the billions borrowed during its acquisition binge in the mid-2010s, including for the Ingram Micro acquisition. The Ingram Micro loan specifically was difficult to repay as Ingram Micro's dividends were not enough to cover the principal and interest repayment of the $4 billion USD loan. Then, on May 6, 2020, the lending syndicate entered into an agreement with the borrower to extend the second principal repayment installment and the third principal repayment installment ($750 million USD total) by one year to May 5, 2021 and to extend the fourth principal repayment installment of $600 million USD by by five months (~0.416 years) from December 2, 2020 to May 5, 2021. Record ID#107422 captures ABC's contribution to the debt rescheduling. Record ID#107423 captures BOC's contribution to the debt rescheduling. Record ID#107424 captures PSBC's contribution to the debt rescheduling. However, payment was not made on that date as scheduled. On November 14, 2016, the New York Branch of China Construction Bank Corporation (CCB) entered into a $270 million USD bilateral loan agreement with GCL Investment Management, Inc. to facilitate Tianjin Tianhai Investment’s acquisition of a 100% equity stake in Ingram Micro. This loan carried a maturity period of seven years. This loan was secured by interests pledged by GCL Investment Management and Tianjin Tianhai Investment. Record ID#107395 captures the CCB loan. In November 2019, the borrower repaid the $30 million USD of the principal of the loan. In June 2020, the remaining principal and interest of the original loan from the New York Branch of CCB, totaling approximately $242 million USD, was repaid by the Hainan Branch of CCB via a performance guarantee; then, on December 4, 2020, the Hainan Branch of CCB entered into a $130 million USD loan agreement with GCL Investment Management, Inc. that served as the advance payment generated by the financing guarantee, to be repaid when Ingram Micro was sold. This loan was secured and received guarantees. Record ID#107404 captures the $130 million USD loan. The proceeds of the loans were to be used by the borrower to finance Tianjin Tianhai Investment's acquisition of Ingram Micro Inc.. Ingram Micro is an American technology, mobility, cloud, and supply chain solutions provider and distributor of information technology products and services, including electronics such as semiconductors and hardware and software for computers and mobile network equipment and other computer peripheral equipment, electronic consumer products, and physical security, automatic identification and data collection products, headquartered in Irvine, California that was listed on the New York Stock Exchange and was considered a Fortune 500 corporation. Ingram Micro had a sales and distribution network via 190 logistics centers and maintenance service centers in 64 countries throughout North America, Europe, the Middle East, Turkey, Africa, Latin America, and the Asia Pacific and business operations in over 160 countries. On February 18, 2016, Tianjin Tianhai Investment Company, Ltd. entered into a definitive merger agreement with Ingram Micro Inc., where Tianjin Tianhai, via indirect wholly-owned subsidiary GCL Acquisition, Inc., would acquire 100% of the equity of Ingram Micro for $38.90 USD per share in cash, valuing Ingram Micro with an equity value of approximately $6.0 billion USD, a premium of approximately 39% over the average closing share price of Ingram Micro for the 30 trading days ended on February 16, 2016. Under the agreement, Ingram Micro would remain headquartered in Irvine and would continue to be led by its chief executive officer Alan Monié. The acquisition was expected to bring Ingram Micro's supply chain management expertise and technology solutions to improve HNA Group's goal to become a goal, one-stop provider of logistics and supply chain solutions and services, and to help Ingram Micro grow its business globally. The acquisition would make Ingram Micro the largest subsidiary of HNA Group in terms of revenue. The acquisition was expected to close in the second half of 2016. After consultations, in July 2016, Tianjin Tianhai elected to submit a joint voluntary notice to the Committee on Foreign Investment in the United States (CFIUS). On November 1, 2016, CFIUS issued clearance for the acquisition; clearance from the antitrust authorities in Austria, Italy, Poland, and Slovakia were announced. The acquisition was completed on December 5, 2016. In December 2020, Platinum Equity, LLC entered into a definitive agreement to acquire Ingram Micro from HNA Technology for $7.2 billion USD. On July 8, 2021, Tianjin Tianhai Logistics Investment Management Co., Ltd., a holding subsidiary of HNA Technology Co., Ltd., merged GCL Investment Management, Inc. with Imola Acquisition Corporation, a vehicle of Platinum Equity. to form a new Delaware-incorporated subsidiary, Imola Merger Corporation, with Imola Acquisition Corporation holding 100% of the equity. Using the proceeds of the sale, GCL Investment repaid the outstanding $3,591,789,325.23 USD under the $4 billion USD syndicated loan and the $132,234,214.36 USD under the $130 million USD CCB loan and the pledges and guarantees were terminated under both.