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Overview

ICBC Leasing enters into a sale-and-leaseback agreement with Asiana Airlines for two Airbus A350-900 aircraft

Commitment Year•2019Country 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
Jun 20, 2019
End (actual)
Jun 20, 2019

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 with Asiana Airlines for two Airbus A350-900 aircraft

Interest type•Unknown

Collateral

The agreement was secured by the relevant the two Airbus A350-900 aircraft.

Narrative

Full Description

Project narrative

On June 20, 2019, 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 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 two 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. On February 3, 2020, ICBC Leasing delivered a Airbus A350-900 aircraft to Asiana Airlines on a 12-year operating lease under a sale-and-leaseback, which may have been associated with the sale-and-leaseback from June 2019.

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. In aviation finance, financial close often occurs on or around the delivery date of the final aircraft. As financial close occurred on June 20, 2019, the last aircraft was likely delivered on or around that date. Thus AidData has coded the actual_implementation_completion_date field as June 20, 2019 and marked the actual_implementation_completion_date_estimated? fields as True.