Bank of China contributes $275 million USD to the $5 billion USD 'Tranche B' of a $10 billion USD syndicated loan to AT&T to finance its acquisition of Time Warner (Linked to Record ID#107956, #107958, and #107959)

Project narrative

On October 22, 2016, AT&T Inc. — a Delaware-incorporated American multinational telecommunications holding company headquartered in Dallas, Texas and listed on the New York Stock Exchange — entered into an Agreement and Plan of Merger with Delaware-incorporated Time Warner Inc., an American multinational entertainment and mass media company based in New York City, New York, in which AT&T would acquire 100% of the issued and outstanding common stock in Timer Warner in a 50% cash and 50% stock transaction at approximately $107.50 USD for each share of Time Warner common stock, or $53.75 USD in cash a number of shares in AT&T common stock equal to the exchange ratio, for a consideration worth approximately $85.4 billion USD at announcement. West Merger Sub, Inc., a Delaware-incorporated wholly owned subsidiary of AT&T, would merge into Time Warner, and Time Warner continuing as the surviving entity. On October 22, 2016, a two-bank syndicate of JPMorgan Chase Bank, N.A. and Bank of America, N.A. entered into a $40,000,000,000.00 USD syndicated bridge term loan credit agreement with AT&T Inc. to finance a portion of the cash consideration to be paid for the acquisition of Time Warner, to refinance debt of Time Warner and its subsidiaries, and to pay of related fees and expenses. This loan carried a maturity period of 364 days from drawing and was divided into a $30,000,000,000.00 USD tranche and a $10,000,000,000.00 USD tranche. Borrowings under the loan carried interest rates based on a floating rate, that at the borrower's discretion was either a variable annual base rate (the highest of the prime rate of JPMorgan Chase Bank, 0.5% per annum above the federal funds rate, or one-month USD LIBOR plus 1.00%) or LIBOR for a period of one, two, three or six months, plus a margin. The margin for LIBOR debt would equal to 0.750%, 1.000%, 1.125%, 1.250% or 1.500% per annum depending on the the borrower's unsecured long-term debt ratings, while the margin for base rate debt would be equal to the greater of 0.00% and or the equivalent margin for LIBOR minus 1.00% per annum. The margin was scheduled to increase by an additional 0.25% on the 90th day after the closing of the acquisition and another 0.25% every 90 days thereafter. The borrower was obligated to pay a commitment fee of either 0.070%, 0.090%, 0.100%, 0.125% or 0.175% of the commitment amount per annum, depending on the the borrower's unsecured long-term debt ratings. The borrower was scheduled to pay a duration fee of 0.50%, 0.75% and 1.00% on the amount of advances outstanding as of the 90th, 180th and 270th day after advances were made. If the borrower's unsecured long-term debt ratings were split by S&P, Moody’s and Fitch, the margin and fee would be determined by the highest of the three, except when when the lowest was more than one below, it which case it would be one level above the lowest rating. At the time of signing, AT&T's unsecured long-term debt was rated BBB+ by S&P, Baa1 by Moody’s and A- by Fitch, making the LIBOR margin 1.000%, the base rate margin 0.000%, and the commitment fee 0.100%. The facility was conditional on the acquisition being completed. The facility contained a limitations on liens covenant and, beginning in the first full fiscal quarter ending after the closing date, a net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) financial ratio covenant that the borrower was to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.5 to 1 of: a) all items that would be treated under accounting principles generally accepted in the United States (GAAP) as indebtedness on the borrower's consolidated balance sheet minus certain cash to b) the borrower's net income and its consolidated subsidiaries, determined on a consolidated basis for the four quarters then ended in accordance with GAAP, with adjustments. Events of default would result in the possibility of acceleration of required payment and increase the margin by 2.00% per annum. On November 15, 2016, a syndicate of 20 banks — including the New York Branch of the Bank of China (BOC) — entered into a $10,000,000,000 USD syndicated term loan credit agreement with AT&T to to finance a portion of the cash consideration for the acquisition of Time Warner Inc., to refinance Time Warner debt, and to pay related fees and expenses. This loan was divided into two tranches of $5,000,000,000 USD each: a tranche with a maturity period of 2.5 years after the acquisition date and a tranche with a maturity period of 4.5 years after the acquisition date, with a grace period of 2.75 years after that date and 25% of the principal due prior to the final maturity date. Borrowings under the loan carried interest rates based on a floating rate, that at the borrower's discretion was either a variable annual base rate (the highest of the prime rate of JPMorgan Chase Bank, 0.5% per annum above the federal funds rate, or one-month USD LIBOR plus 1.00%) or LIBOR for a period of one, two, three or six months, plus a margin. The margin for LIBOR debt in Tranche A would equal to 1.000%, 1.125%, or 1.250% per annum depending on the the borrower's unsecured long-term debt ratings, while the margin for base rate debt would be equal to the greater of 0.00% and or the equivalent margin for LIBOR minus 1.00% per annum. The margin for LIBOR debt in Tranche B would equal to 1.125%, 1.250%, or 1.375% per annum depending on the the borrower's unsecured long-term debt ratings, while the margin for base rate debt would be equal to the greater of 0.00% and or the equivalent margin for LIBOR minus 1.00% per annum. The borrower was obligated to pay a commitment fee of either 0.090%, 0.100% or 0.125% of the commitment amount per annum, depending on the borrower's unsecured long-term debt ratings. If the borrower's unsecured long-term debt ratings were split by S&P, Moody’s and Fitch, the margin and fee would be determined by the highest of the three, except when when the lowest was more than one below, it which case it would be one level above the lowest rating. At the time of signing, AT&T's unsecured long-term debt was rated BBB+ by S&P, Baa1 by Moody’s and A- by Fitch, making the LIBOR margin for Tranche A 1.000%, the base rate margin for Tranche A 0.000%, the LIBOR margin for Tranche B 1.125%, the base rate margin for Tranche B 0.125%, and the commitment fee 0.100%. The facility was conditional on the acquisition being completed. The facility contained a limitations on liens covenant and, beginning in the first full fiscal quarter ending after the closing date, a net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) financial ratio covenant that the borrower was to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.5 to 1 of: a) all items that would be treated under accounting principles generally accepted in the United States (GAAP) as indebtedness on the borrower's consolidated balance sheet minus certain cash to b) the borrower's net income and its consolidated subsidiaries, determined on a consolidated basis for the four quarters then ended in accordance with GAAP, with adjustments. Events of default would result in the possibility of acceleration of required payment and increase the margin by 2.00% per annum. BOC contributed $262,500,000 USD to Tranche A, as captured by Record ID#107956, and $262,500,000 USD to Tranche B, as captured by Record ID#107957. In addition to BOC, the following lenders contributed to the loan syndicate: JPMorgan Chase Bank, N.A. ($332,500,000 USD to Tranche A; $332,500,000 USD to Tranche B), Bank of America, N.A. ($332,500,000 USD to Tranche A; $332,500,000 USD to Tranche B), The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) ($332,500,000 USD to Tranche A; $332,500,000 USD to Tranche B), Barclays Bank PLC ($332,500,000 USD to Tranche A; $332,500,000 USD to Tranche B), Mizuho Bank, Ltd. ($332,500,000 USD to Tranche A; $332,500,000 USD to Tranche B), the New York Branch of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), Banco Santander, S.A. ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), BNP Paribas ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), the New York Branch of Commerzbank AG ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), the Cayman Islands Branch of Credit Suisse AG ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), the New York Branch of Deutsche Bank AG ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), Goldman Sachs Bank USA ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), Royal Bank of Canada (RBC) ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), Société Générale S.A. (SocGen) ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), the New York Branch of The Toronto-Dominion Bank ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), Wells Fargo Bank, National Association ($262,500,000 USD to Tranche A; $262,500,000 USD to Tranche B), The Bank of New York Mellon ($62,500,000 USD to Tranche A; $62,500,000 USD to Tranche B), the New York Branch of Intesa Sanpaolo S.p.A. ($62,500,000 USD to Tranche A; $62,500,000 USD to Tranche B), and U.S. Bank National Association ($62,500,000 USD to Tranche A; $62,500,000 USD to Tranche B). JPMorgan Chase Bank served as agent. JPMorgan Chase Bank, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BTMU, Barclays Bank, and Mizuho Bank. served as joint lead arrangers and joint bookrunners. Bank of America, N.A. acted as the syndication agent. BTMU, Barclays Bank, and Mizuho Bank, served as documentation agents. Upon entry of the $10 billion USD term loan credit agreement, the $10 billion USD tranche of the $40 billion USD term loan credit agreement dated October 22, 2016 was terminated. However, the $30 billion USD portion remained in effect. Specifically, also, on November 15, 2016, the same syndicate of 20 banks — still including BOC — entered into an amendment-and-restatement agreement for the $30 billion USD syndicated bridge term loan credit agreement with AT&T Inc.; the effect of this agreement was to syndicate portion of the $30 billion USD debt committed by JPMorgan and Bank of America to new 18 banks, and the loan term remained the same. Record ID#107955 captures BOC's contribution to the $30 billion USD bridge loan. JPMorgan Chase Bank served as the agent. JPMorgan Chase Bank, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BTMU, Barclays Bank, and Mizuho Bank served as joint lead arrangers. JPMorgan Chase Bank and Merrill Lynch, Pierce, Fenner & Smith Incorporated served as joint bookrunners. The New York Branch of BOC, the New York Branch of BBVA BNP Paribas Securities Corp., the New York Branch of Commerzbank AG, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, RBC, Santander Bank, N.A., SG Americas Securities, LLC, TD Securities (USA) LLC, and Wells Fargo Securities, LLC served as co-arrangers. Bank of America, BTMU, Barclays Bank, and Mizuho Bank served as syndication agents. The New York Branch of BOC, the New York Branch of BBVA, BNP Paribas, the New York Branch of Commerzbank AG, Credit Suisse AG, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, RBC, Santander Bank, N.A., SG Americas Securities, LLC, TD Securities (USA) LLC, and Wells Fargo Bank served as documentation agents. On February 10, 2017, the lending syndicate entered into a letter amendment agreement with AT&T for the $30 billion USD syndicated bridge term loan credit agreement in which the definition of indebtedness was modified. In August 2017, AT&T issued $22.5 billion USD of global notes to finance the acquisition. Then, in September 2017, it reduced the commitments under the $30 billion USD facility to zero and terminated it. AidData considers the bridge commitments to have been cancelled. On February 2, 2018, the 20-bank lending syndicate — still including BOC — entered into a letter agreement with AT&T for the $10 billion USD syndicated term loan credit agreement with AT&T Inc.; in the letter amendment, the commitment termination date was extended to December 31, 2018 and the loan was up-sized by $6,175,000,000 USD, with the two tranches each increasing by $3,087,500,000 USD. BOC contributed $150,000,000 USD to the up-sizing of Tranche A ($412,500,000 USD total), as captured by Record ID#107958, and $150,000,000 USD to the up-sizing of Tranche B ($412,500,000 USD total), as captured by Record ID#107959. In addition to BOC, the following lenders contributed the respective amounts to the up-sized loan: JPMorgan Chase Bank ($250,000,000 USD to Tranche A; $250,000,000 USD to Tranche B), Bank of America, N.A. ($250,000,000 USD to Tranche A; $250,000,000 USD to Tranche B), BTMU ($200,000,000 USD to Tranche A; $200,000,000 USD to Tranche B), Barclays Bank ($200,000,000 USD decrease to Tranche A; $200,000,000 USD decrease to Tranche B), Mizuho Bank ($200,000,000 USD to Tranche A; $200,000,000 USD to Tranche B), BNP Paribas ($250,000,000 USD to Tranche A; $250,000,000 USD to Tranche B), RBC ($200,000,000 USD to Tranche A; $200,000,000 USD to Tranche B), the New York Branch of BBVA ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), the New York Branch of Banco Santander ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), the New York Branch of Commerzbank AG ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), the Cayman Islands Branch of Credit Suisse ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), the New York Branch of Deutsche Bank ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), Goldman Sachs Bank USA ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), SocGen ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), the New York Branch of The Toronto-Dominion Bank ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), Wells Fargo Bank ($150,000,000 USD to Tranche A; $150,000,000 USD to Tranche B), and The Bank of New York Mellon ($37,500,000 USD to Tranche A; $37,500,000 USD to Tranche B). Intesa Sanpaolo and U.S. Bank's contributions did not change. On February 15, 2017, Time Warner shareholders approved the merger. On November 20, 2017, the United States Department of Justice (DOJ) filed a complaint in the U.S. District Court, District of Columbia seeking a permanent injunction to prevent AT&T from acquiring Time Warner, alleging that the merger would substantially lessen competition in violation of federal antitrust law. On December 21, 2017, AT&T and Time Warner agreed to extend the termination date of the merger agreement to June 21, 2018 in light of the civil antitrust lawsuit. The court approved the acquisition. The acquisition was completed on June 14, 2018. TimeWarner was renamed Warner Media after the acquisition. On or around the acquisition date of June 14, 2018, the borrower drew down the entire $16.175 billion USD term loan agreement. During 2018, it repaid all amounts outstanding under Tranche B and $5.463 billion USD under Tranche A. Then, on February 20, 2019, it paid the remaining $2.625 billion USD of Tranche B, which was then terminated.