Bank of China International contributes to the €2.2 billion EUR tranche of a €3.2 billion EUR syndicated loan to H3G to finance the development of a 3G telecommunications network in Italy

Project narrative

On June 19, 2002, a syndicate of 23 lenders — including the Singapore Branch and the Sydney Branch of the Bank of China (BOC), Bank of China (Canada), Bank of China (Hong Kong) Limited (BOCHK), Bank of China International Limited, China Construction Bank Corporation (CCB), Nanyang Commercial Bank (NCB), and Chiyu Banking Corporation — entered into a €3.200 billion EUR syndicated senior credit facility agreement with H3G S.p.A. (later named 3 Italia S.p.A.) — an Italy-incorporated telecommunications company wholly-owned by Hutchison 3G S.p.A. (H3GI), an Italy-incorporated special purpose vehicle then jointly owned by Hong Kong-incorporated and based Hutchison Whampoa Limited (88.228% equity stake), NHS Investments S.A. (5.639% equity stake), Bernabè Mobile Investments 2 S.A. (2.256% equity stake), CIRtel International S.A. (1.825% equity stake), HdP S.p.A. (1.128% equity stake), Gemina S.p.A. (0.564% equity stake), and Tiscali Finance S.A. (0.360% equity stake) — to finance the development of its 3G telecommunications network in Italy. The loan carried a tenor (maturity) of 9.75 years. The loan was divided into two tranches: a €1.000 billion EUR credit facility tranche with an interest rate based on a floating rate, varying according to the debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio; and a €2.200 billion EUR credit facility tranche with an interest rate based on a floating rate. Hutchison Whampoa Limited and Hutchison Whampoa Europe Investments S.à r.l. — a Luxembourg-incorporated indirect wholly owned subsidiary of Hutchison Whampoa Limited — jointly and severally provided a guarantee for the €2.2 billion EUR tranche, with the guarantees to begin gradually falling away once H3G achieves agreed operating and financial performance thresholds (the meeting of certain subscriber numbers, revenues and coverage standards of the 3G network). The entire facility was secured by (i.e. collateralized against) a pledge of all the shares in H3G S.p.A. held by Hutchison 3G S.p.A.. Only the underwriting mandated lead arrangers contributed to the €1.1 billion EUR tranche, including Bank of China International and CCB. Record ID#108538 captures the contribution of Bank of China International. Record ID#108542 captures the contribution of CCB. In addition to Bank of China International and CCB, the following lenders contributed to the tranche (15 total): ABN AMRO Bank N.V., Banca Antoniana Popolare Veneta (BAPV), Crédit Agricole Indosuez (CAI), the Development Bank of Singapore (DBS), HSBC Bank, IntesaBci S.p.A., JPMorgan Chase Bank, N.A., Royal Bank of Scotland (RBS), Société Générale S.A. (SocGen), Unicredit Banca Mobiliare S.p.A. (UBM), WestLB AG, Deutsche Bank AG, and Centrobanca. All lenders contributed to the €2.2 billion EUR tranche. Record ID#108543 captures the contribution of the Singapore Branch and the Sydney Branch of BOC. Record ID#108544 captures the contribution of Bank of China (Canada). Record ID#108545 captures the contribution of BOCHK. Record ID#108546 captures the contribution of Bank of China International Limited. Record ID#108547 captures the contribution of CCB. Record ID#108548 captures the contribution of Nanyang Commercial Bank. Record ID#108549 captures the contribution of Chiyu Banking Corporation. In addition to the Chinese state-owned banks, the following lenders contributed to the tranche (23 total): ABN AMRO Bank, BAPV, CAI, the Development Bank of Singapore (DBS), HSBC Bank, IntesaBci, JPMorgan Chase Bank, RBS, SocGen, UBM, WestLB, Deutsche Bank, Centrobanca, Sanpaolo IMI S.p.A., Skandinaviska Enskilda Banken AB (SEB). H3G announced that entered into an agreement for the €3.2 billion EUR syndicated loan with a group of 11 underwriting mandated lead arrangers. The original 11 underwriting mandated lead arrangers were ABN AMRO Bank, BAPV, CAI, the Development Bank of Singapore, Deutsche Bank, HSBC, Intesa BCI, JPMorgan, RBS, SG Investment Banking and WestLB. A week later, on January 23, 2002, another four additional underwriting mandated lead arrangers were announced: Bank of China International, CCB, UBM, and Centrobanca. Syndication was to begin in January 2002. BOCHK, the Singapore and Sydney Branches of BOC, Bank of China (Canada), NCB, Chiyu, Sanpaolo IMI, and SEB served as participants. Sanpaolo and IMI joined in general syndication. In addition to the €3.2 billion EUR debt, Hutchison 3G S.p.A. provided a €1 billion EUR and a loan facility of €400 million EUR to H3G S.p.A. and there was a €1 billion EUR vendor tranche from KN, KfW, Nordea, and HSBC (€5.6 billion EUR total in debt). Additionally, Hutchison 3G S.p.A. contributed €5.1 billion EUR in equity (€10.6 billion EUR total). The proceeds were to be used by the borrower to finance the buildout of a greenfield 3G mobile cellular system (Universal Mobile Telecommunications System (UMTS)) in Italy. Ericsson and Siemens were the network equipment suppliers. NEC, Alcatel, and Motorola were also suppliers for the project. The project was expected it would be initially operational by the end of 2002, with full network build-out projected to be complete in 2007. H3G held 35 Mhz of spectrum from the UMTS auction held by the Italian Government in October 2000, winning it under the name Andala for an offer of €3.253 billion EUR. 3G operations began in 2003. Circa January 26, 2007, a syndicate of 20 banks — including BOC and CCB — entered into a €3.000 billion EUR ($31.230 billion HKD) syndicated loan agreement with 3 Italia S.p.A. — the Italy-incorporated mobile phone company then jointly owned by Hutchison Whampoa Limited (95.4% equity stake), NHS Investments S.A. (3.9% equity stake), Rizzoli Corriere della Sera Mediagroup (formerly HdP) (0.5% equity stake), Gemina (0.2% equity stake) and 3G Mobile Investments S.A. (formerly Bernabè Mobile Investments 2) (0.0002% equity stake) — for refinancing and general corporate purposes. The loan carried a maturity period of five years and an interest rate based on a floating rate plus a margin of 32.5 basis points (bps). Hutchison Whampoa fully guaranteed the loan. The proceeds were used the borrower to refinance the €2.464 billion EUR ($25.649 billion HKD) outstanding of the existing 2002 €3.2 billion EUR syndicated loan and for general corporate purposes. The loan was fully drawn in 2007. BOC and CCB, like all 14 bookrunners and mandated lead arrangers, each committed €200 million EUR before syndication. Record ID#108551 captures BOC's contribution. Record ID#108552 captures CCB's contribution.