ICBC provides a €80 million EUR revolving credit facility to Ferretti to facilitate Weichai Group Holdings' acquisition of 75% stake in it

Project narrative

Circa January 10, 2012, the Industrial and Commercial Bank of China (ICBC) agreed in principle to provide €196 million EUR of loan facilities with Ferretti S.p.A. — an Italy-incorporated yachtmaker — to facilitate Chinese state-owned Weichai Group Holdings Limited's — a China-incorporated wholly-owned subsidiary of Shandong Heavy Industry Group Co., Ltd. (SHIG), a Chinese provincial-owned multinational company owned by State-owned Assets Supervision and Administration Commission of Shandong Province (70%), Shandong Guohui Investment Co., Ltd. (20%, a company wholly owned by Shandong SASAC), and the Shandong Provincial Council for Social Security Fund (10%) — acquisition of a 75% stake of Ferretti. The facilities were divided into a €116 million EUR loan to be used to refinance existing debt of Ferretti and a €80 million EUR revolving credit facility (RCF). The loan was apparently issued once the acquisition completed on July 3, 2012. Record ID#109724 captures the €116 million EUR loan. Record ID#109742 captures the €80 million EUR revolving credit facility. Furthermore, the Shandong Branch of the Bank of China (BOC) provided a loan to Weichai Group Holdings to facilitate the acquisition of a 75% stake in Ferretti S.p.A.. Record ID#109743 captures BOC's contribution. Ferretti S.p.A. was an Italy-incorporated multinational shipbuilding company specializing in the design, construction, and sale of luxury motor yachts. Its products included high performance open cruisers, fly-bridge motoryachts, open motor-yachts, lobster boats, and maxi yachts made of composite materials ranging from 39 to 43 meters and steel mega-yachts ranging from 46 to 120 meters. It owned the Pershing, Riva and Ferretti Yachts brands. Ferretti ranked first in the 2011 Global Order Book (the benchmark annual report on the nautical industry by ShowBoat International). It was the second largest yacht maker in Italy and the world largest luxury yacht maker. It was headquartered in Forlì, Emilia-Romagna, Italy, with manufacturing in Italy and the United States. It had 60 distributors in strategic markets with its marketing and sales networking system in over 80 countries and regions in the whole world with 60 distributors in the primary strategic markets. Its revenues in 2010 was €500 million EUR in 2010, and the earnings before interest, taxes, depreciation and amortization (EBITDA) was €30 million EUR. Ferretti was experiencing major financial problems when the acquisition was proposed. Candover Investments Plc had purchased Ferretti for €1.5 billion EUR in a leveraged buyout in 2007, leaving Ferretti with €1.2 billion EUR of debt on its books. Due to the global financial crisis in 2008, Ferretti's customer base crumbled. In January 2009, the company defaulted on its debt. In April 2009, a group of 100 creditors to Ferretti, led by the Royal Bank of Scotland, wrote down the debt to €560 million EUR in exchange from a 53% stake in Ferretti from Candover, which lost its investment, allowing Ferretti to avoid bankruptcy. On January 10, 2012, Weichai Group Holdings Limited signed a formal agreement to acquire 75% stake in Ferretti from its lenders. Weichai would provide a total consideration of €374 million EUR ($287.7 million USD), divided into a €178 million EUR ($136.9 million USD) equity investment into Ferretti and €196 million EUR of debt from ICBC. The approximately €580 million EUR of existing debt would be replaced by the €116 million EUR ICBC loan. Weichai Holding Group Hong Kong Investment Co. Ltd. was the specific acquiring agency, and the stake was in Ferretti holding company Ferretti International Holding S.p.A.. Ferretti International Holding, besides Weichai Holding Group Hong Kong Investment would be owned as follows after completion: 16.63% by Royal Bank of Scotland (RBS), 7.52% by a series of investment funds attributable to a group of funds managed by Strategic Value Partners, LLC, 0.83% by Contrarian Capital Management LLC, and 0.02% by Butler Management Limited. Ferretti's management team, headquarters, and production bases were to remain in Italy. The acquisition was expected to help Ferretti meet the growing Chinese demand for yachts, with Shandong Heavy planning to build yachts in China for that market. Shandong Heavy planned to list Ferretti in Hong Kong within three to five years of the acquisition. This was the first Chinese acquisition of a top Italian yachtmaker. The acquisition was completed on July 3, 2012.