China CITIC Bank Corporation contributes to a $2.63 billion USD syndicated loan to Ninestar Holdings to finance its acquisition of Lexmark International, Inc. (Linked to Record ID#107643, #107644, and #107645)

Project narrative

On November 21, 2016, a syndicate of four banks — including the Guangzhou Branch of China CITIC Bank Corporation Limited, China CITIC Bank International Limited, the Export-Import Bank of China, and the Bank of China (BOC) — entered into a $2.63 billion USD senior secured syndicated term loan facilities agreement with Ninestar Holdings Company Limited — a Cayman Islands-incorporated special purpose vehicle (SPV) and joint venture of Chinese inkjet and laser cartridge company Apex Technology Co., Ltd., PAG Asia I LP and PAG Asia II LP, both Cayman Islands-incorporated private equity funds sponsored and managed by PAG Asia Capital Limited, the private equity buyout arm of Hong Kong-based Asian investment and private equity firm PAG Group Limited, and Legend Capital Management Co., Ltd., a China-incorporated company and the venture capital arm of Legend Holdings Corporation — and Ninestar Group Holding Limited — a Cayman Islands-incorporated SPV and wholly-owned subsidiary of Ninestar Holdings — and Ninestar Lexmark Company Limited — a Delaware-incorporated SPV and wholly-owned subsidiary of Ninestar Group Holding — to finance its acquisition of American printer company Lexmark International, Inc. This loan was divided into four tranches: a RMB-denominated senior secured term loan tranche in the USD equivalent amount of $1.180 billion USD with a maturity period of seven years; a $900 million USD term loan tranche with a maturity period of three years; a $150 million USD revolving facility tranche available for working capital and general corporate purposes with a maturity period of three years with an option to extend by additional two years; and a $400 million USD term loan tranche available to be drawn within one year (subject to credit approval from the lenders) with a maturity period of seven years. Record ID#107642 captures China CITIC Bank Corporation's commitment to the syndicate. Record ID#107643 captures China CITIC Bank International Limited's commitment to the syndicate. Record ID#107644 captures China Eximbank's commitment to the syndicate. Record ID#107645 captures BOC's commitment to the syndicate. These facilities were secured by (i.e. collateralized against) pledges of the equity interests in Lexmark International, Inc., Ninestar Holdings Company Limited, Ninestar Group Holding Limited, and certain other indirect parent entities of Lexmark International, and within 90 days of the closing date of the credit agreement, Lexmark International was required to grant, or cause to be granted, a security interest in substantially all of its assets and the assets of certain of its subsidiaries. Ninestar Corporation, Ninestar Lexmark Company Limited (then succeeded by Lexmark International, Inc.), and Ninestar Group Company Limited issued guarantees for the loan. China CITIC Bank served as global coordinator, administrative agent, and collateral agent. China CITIC Bank, China CITIC Bank International, China Eximbank, and BOC served as joint mandated lead arrangers. On April 19, 2016, Lexmark International, Inc. entered into an agreement and plan of merger with Ninestar Holdings Company Limited, Ninestar Group Company Limited, Ninestar Lexmark Company Limited, and Apex Technology Co., Ltd. in which Lexmark agreed to be acquired by Ninestar via a merger of Ninestar Lexmark Company Limited into Lexmark International, Inc., with Lexmark International with the Company continuing as the surviving corporation and becoming an indirect wholly owned subsidiary of Ninestar Holdings Company Limited for a consideration of $40.50 USD (€35.64 EUR) in cash (30% premium to the closing price of the shares on April 19), without interest for each share of Class A common stock in Lexmark International, for a total consideration of $2.54 billion USD, giving Lexmark an enterprise value of about $3.6 billion USD when including its debt. On April 19, 2016, the New York Branch of BOC, China CITIC Bank International and its New York Branch, the Guangzhou Branch of China CITIC Bank Corporation executed debt commitment letters for $1.140 billion USD of senior term loan facilities with Ninestar Lexmark Company Limited as borrower to finance the acquisition. On April 19, 2016, the Zhuhai and Macau Branches of the Bank of China, China CITIC Bank International and its New York Branch, and the Guangzhou Branch of China CITIC Bank Corporation executed debt commitment letters for $443 million USD of term loan facilities with Ninestar Group Company Limited as borrower to finance the acquisition. The debt commitments would expire on December 16, 2016. On April 19, 2016, Apex, PAG Asia I LP, PAG Asia II LP, and Legend Capital Management Co., Ltd. each executed equity commitment letters for $2.320 million USD in equity to finance the acquisition. Lexmark International, Inc. was a Delaware-incorporated American technology company based in Lexington, Kentucky and listed on the New York Stock Exchange. Lexmark was formed in 1991 as a spin-off of International Business Machines Corporation (IBM). Lexmark is a developer, manufacturer, and supplier of printing, imaging, device management, managed print services (MPS), document workflow, and business process and content management solutions worldwide. It operated through two segments, Imaging Solutions and Services (ISS), and Enterprise Software. The ISS segment had a portfolio of color and monochrome laser printers, laser multifunction products, and dot matrix printers, and cartridges, service parts, and other supplies for use in the installed base of laser, inkjet, and dot matrix printers. It also provided maintenance, consulting, systems integration services, and MPS offerings, such as asset lifecycle management, implementation and decommissioning services, consumables management, remote device monitoring and management, and business process optimization services. Lexmark products were widely used in companies operating in sectors from financial services, logistics, and health care. In 2015, it reported over $3.5 billion USD in revenue, 56% from overseas, and it employed 13,000 people worldwide. As part of the acquisition, Lexmark's corporate headquarters in Lexington, Kentucky would be maintained. Lexmark's Enterprise Software would be separated from Lexmark and rebranded to Kofax, which it was planned to sell while focusing on growing its imaging business, particularly in China and the wider Asia-Pacific. The acquisition and partnership with Apex was expected to allow Lexmark to offer a complete line of printer products, streamline its development and supply chains, and extend its reach in Asia. Chairman and chief executive officer (CEO) Paul Rooke was expected to continue leading Lexmark after the acquisition was completed. Lexmark's board of director unanimously approved the acquisition. The acquisition was subject to approval by a majority of all outstanding shares of common stock of Lexmark International, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of certain foreign antitrust/competition approvals, the review of the transaction by the Committee on Foreign Investment in the United States (CFIUS), certain approvals by Chinese governmental authorities, and the absence of any governmental order prohibiting the consummation of the acquisition in any jurisdiction in which the combined businesses of Lexmark and Apex were not de minimis. The acquisition included termination rights allowing Lexmark to terminate if it received a superior acquisition proposal from a third party though in certain circumstances, Lexmark would owe a termination fee of $95 million USD to Ninestar. Ninestar also would be required to pay Lexmark a termination fee of $150 million USD if the agreement was terminated because regulatory approvals in China were not obtained or there was another legal restriction in China prohibiting it, if Ninestar failed to completed the closing when all conditions were satisfied, Apex shareholders did not vote to approve the acquisition, or if Ninestar failed to deliver a $150 million USD letter of credit for the termination fee. The acquisition was expected to close in the second half of 2016. The acquisition was completed on November 29, 2016. The acquisition, when completed, was the second largest outbound acquisition in the technology sector ever completed by a Chinese investor and the third largest U.S. public takeover ever done by a Chinese investor. On November 29, 2016, pursuant to the terms of the credit agreement and in tandem with the acquisition close, Lexmark International as the surviving entity in the merger with Ninestar Lexmark Company Limited, assumed the obligations of borrower under the credit agreement. As part of the acquisition, Lexmark entered into a national security agreement with the U.S. Departments of Defense and Homeland Security, which established that its board of directors would be made up entirely of U.S. citizens and be independent of its owners. There were also concerns as Ninestar Corporation in 2012 was found by a U.S. court had deliberately and in bad faith imported patent-infringing printer cartridges into the United States. On June 9, 2023, the Department of Homeland Security announced that it would restrict goods produced by Ninestar Corporation into the United States over alleged human rights abuses (use of Uyghurs and other persecuted groups as forced labor) as part of the U.S. Uyghur Forced Labor Protection Act (UFLPA) that prohibited goods made in Xinjiang or companies of a list for forced labor. As a result, Lexmark ceased shipments from Ninestar. In December 2024, Xerox entered into an agreement to purchase Lexmark for $1.5 billion USD from the consortium.