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Overview

Bank of China contributes $89 million USD to $2 billion USD syndicated loan facility to Coach for working capital and acquisition of Kate Spade & Company in 2017

Commitments (Constant USD, 2023)$94,707,248
Commitment Year•2017Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesSector•Business And Other ServicesFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
May 30, 2017
End (actual)
Jul 11, 2017
Last repayment (originally scheduled)
May 29, 2022

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • Bank of China (BOC)

Cofinancing agencies

Private Sector

  • Bank of America, N.A.
  • Barclays Bank PLC
  • BNP Paribas S.A.
  • Citibank, N.A.
  • Goldman Sachs Bank USA
  • HSBC Bank USA, N.A.
  • JPMorgan Chase Bank, N.A. (Chase Bank, formerly the Chase Manhattan Bank)
  • MUFG Bank, Ltd. (Formerly Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU))
  • PNC Bank, National Association
  • TD Bank, N.A.
  • U.S. Bank National Association
  • Wells Fargo Bank N.A.

Receiving agencies

Private Sector

  • Coach Inc.

Loan description

$2 billion USD syndicated loan facility to Coach for working capital and acquisition of Kate Spade & Company in 2017

Interest rate (t₀)•2.53989%Interest type•Variable Interest RateMaturity•5 years

Narrative

Full Description

Project narrative

On May 30, 2017, financial close was reached on a deal in which a syndicate of 13 banks — including Bank of China — entered into a $2 billion USD syndicated loan agreement with Coach, Inc., a New York-based luxury fashion company known for its handbags, luggage, accessories, and ready-to-wear clothing. This loan was divided into three tranches: a $900 million USD revolving credit facility, a $800 million USD Tranche A-1, and a $300 million USD Tranche A-2. The maturity of the loan is 5 years, and the interest rate is LIBOR plus an applicable margin. The proceeds were used by the borrower for general corporate purposes, including to fund the acquisition of Kate Spade & Company and to refinance existing indebtedness. While Bank of China contributed $89 million USD to this loan, the following lenders also participated: Bank of America ($257 million USD), JPMorgan Chase Bank ($257 million USD), HSBC Bank USA ($257 million USD), Citibank ($160 million USD), TD Bank ($160 million USD), U.S. Bank ($160 million USD), Wells Fargo Bank ($160 million USD), Barclays Bank ($100 million USD), BNP Paribas ($100 million USD), Goldman Sachs Bank USA ($100 million USD), PNC Bank ($100 million USD), and The Bank of Tokyo-Mitsubishi UFJ ($100 million USD). On July 11, 2017, Coach finished the acquisition of Kate Spade.

Staff comments

1. The entirety of the 2017 loan contract can be accessed at https://www1.hkexnews.hk/listedco/listconews/sehk/2017/0531/ltn201705311140.pdf. The dropbox link is accessible here: https://www.dropbox.com/scl/fi/b2u1a2akzrgu7ir12iqd9/Source_ID_218536.pdf?rlkey=p8wejchw94wxa1w6qnogh4wu7&st=nzs1irlw&dl=0 2. Coach, Inc. is an American luxury fashion company based in New York City, established in 1941. It is well known for leather handbags and accessories and operates under the parent company Tapestry, Inc., which also owns Kate Spade and Stuart Weitzman. 3. AidData estimates the interest rate by adding the 6-month average LIBOR rate in May 2017 and an applicable margin based on credit ratings (BBB+ or 2%). The 6-month average LIBOR in May 2017 was approximately 1.47%, leading to an estimated total interest rate of 3.47%.