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Overview

ICBC Leasing enters into a sale-and-leaseback agreement worth $437 million USD with Asiana Airlines for one Airbus A320neo and three Airbus A350-900 aircraft

Commitments (Constant USD, 2023)$450,867,680
Commitment Year•2020Country of Activity•KoreaDirect Recipient Country of Incorporation•KoreaSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Dec 29, 2020
End (actual)
Dec 29, 2020

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 companies

  • ICBC Financial Leasing Co., Ltd. (ICBCFL) (ICBC Leasing)

Receiving agencies

Private Sector

  • Asiana Airlines, Inc.

Collateral providers

Private Sector

  • Asiana Airlines, Inc.

Loan description

ICBC Leasing enters into a sale-and-leaseback agreement worth $437 million USD with Asiana Airlines for one Airbus A320neo and three Airbus A350-900 aircraft

Interest type•Unknown

Collateral

The agreement was secured by the relevant one Airbus A320neo and three Airbus A350-900 aircraft.

Narrative

Full Description

Project narrative

On December 29, 2020, financial close was reached on a deal in which ICBC Financial Leasing Co., Ltd. (ICBCFL; ICBC Leasing) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement worth an estimated $437 million USD with Asiana Airlines, Inc. — a South Korea-incorporated airline headquartered in Seoul and listed on the Korea Exchange with Kumho Industrial Co., Ltd. as its largest shareholder (30.77% stake at the time of the lease) — for one Airbus A320neo and three Airbus A350-900 aircraft. The aircraft would be on an operating lease. The agreement was secured by (i.e. collateralized against) the aircraft. The proceeds of the sale-and-leaseback were to be used by the borrower for general corporate purposes..

Staff comments

1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. Under a capital lease (a financial arrangement where the lessee/borrower uses an asset and pays regular installments plus interest to the lender/lessor), rental payments are usually classified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). AidData codes capital leases as loans. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 3. $437 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement. 4. In aviation finance, financial close often occurs on or around the delivery date of the final aircraft. As financial close occurred on December 29, 2020, the last aircraft was likely delivered on or around that date. Thus AidData has coded the actual_implementation_completion_date field as December 29, 2020 and marked the actual_implementation_completion_date_estimated? fields as True.