Narrative
Full Description
Project narrative
On July 31, 2015, a syndicate of 15 banks — including the Hungarian Branch of Bank of China (BOC) — entered into a Kč32,200,000,000 CZK ($1.29518 billion USD) syndicated senior secured term loan facilities agreement with Česká telekomunikační infrastruktura a.s. (CETIN) — the Czech Republic-incorporated telecommunications infrastructure company, created from the infrastructure assets of Czech telecommunications company O2 Czech Republic a.s., majority-owned (94.9% stake) by PPF A4 B.V., a Netherlands-incorporated holding company wholly-owned by PPF Group N.V., a Netherlands-incorporated privately-held international diversified investment group headquartered in Prague and owned Czech businessmen, almost entirely by Czech billionaire Petr Kellner (the wealthiest man in the Czech Republic) — to refinance its acquisition of a majority stake (84.73% at the time of refinancing) in O2 Czech Republic a.s. The loan was divided into two tranches: a Kč10.2 billion CZK ($419.8 million USD term loan tranche known as "Facility A" with a maturity period of three years, a bullet repayment profile, and an interest rate of one-month, three-month, and six-month PRIBOR plus a margin of 0.75% per annum and a Kč22 billion CZK ($905.3 million USD) term loan tranche known as "Facility B" with a maturity period of seven years, a bullet repayment profile, and an interest rate of one-month, three-month, and six-month PRIBOR plus a margin of 1.15% per annum. The loan was secured by (i.e. collateralized against) a pledge over the metallic fixed telecommunication network owned by CETIN; a pledge over material trade receivables of CETIN from its customer O2 Czech Republic a.s.; a pledge over receivables from bank accounts of CETIN; a pledge over receivable from financial assistance of CETIN; and a pledge over shares of CETIN held by PPF Arena 2 B.V. The arrangement fee was Kč67,750,000. BOC contributed Kč500.00 million CZK to the loan syndicate. In addition to BOC, the following lenders contributed to the loan syndicate: BNP Paribas S.A. (Kč3.900 billion CZK), Česká spořitelna (Kč2.600 billion CZK), Citibank Europe plc (CEP) (Kč1.600 billion CZK), Crédit Agricole S.A. (Crédit Agricole Group) (Kč300.00 million CZK), Ceskoslovenska obchodni banka, a. s. (CSOB) (Kč6.000 billion CZK), ING Bank N.V. (Kč3.900 billion CZK), Banca IMI S.P.A. (Kč2.550 billion CZK), Komercni Banka (Kč1.950 billion CZK), Raiffeisen Bank (Kč1.466.66 billion CZK), Société Générale S.A (Kč1.950 billion CZK), Tatra Banka (Kč733.34 million CZK), UniCredit Bank Czech Republic and Slovakia a.s. (Kč2.200 billion CZK), and Všeobecná úverová banka, a.s. (VUB) and its Prague Branch (Kč2.550 billion CZK). Banca IMI, BNP Paribas, CSOB, ING Bank, Komercni Banka, SocGen, and UniCredit Bank Czech Republic and Sloavakia served as joint coordinators, mandated lead arrangers, and bookrunners. SocGen served as facility agent. Komercni banka served as security agent. The Hungarian Branch of BOC, Česká spořitelna, Citibank Europe, Crédit Agricole, Raiffeisen Bank, Tatra Bank, and VUB and its Prague Branch joined in syndication as mandated lead arrangers. The loan was two times oversubscribed. The proceeds were to be used by the borrower to repay the former acquisition loan provided by a syndicate of banks to PPF Arena 2 B.V. for the purchase of O2 Czech Republic a.s. — also known as Telefonica Czech Republic, the largest telecommunications company in the Czech Republic — shares from Telefonica Group in 2014, which began with the acquisition of a 65.9% stake in January 2014; as of August 5, 2015, PPF Arena held 84.73% of O2 Czech Republic. In October 2014, PPF Arena 2 requested that O2 Czech Republic provide financial assistance to repay the acquisition loan, which the general meetings of O2 Czech Republic approved in December 2014. In May 2015, PPF announced that it would request financial aid of up to Kč32.2 billion CZK from CETIN, the newly formed spin-off of O2's fixed and mobile infrastructure, to repay the loan used to acquire the majority stake in O2 Czech Republic. Then, on July 31, 2015, concurrent with the loan signing, CETIN signed an Kč32.2 billion CZK intra-group loan agreement with PPF Arena 2 B.V., in which it on-lent the proceeds of the loan that were used to refinance the acquisition loan. CETIN pre-paid Kč3.4 billion CZK under the loan by the end of 2015. In 2016, PPF Infrastructure B.V. prepaid the intra-group loan in full. CETIN fully repaid the syndicated loan in 2016, though it paid Kč481 million CZK of interest to the syndicate.
Staff comments
1. The exact borrower is unclear; AidData has coded PPF Arena 2 B.V., which received the loan being refinanced, as the borrowing institution. This issue merits further investigation. 2. It is unclear whether BOC contributed to each tranche. Therefore, to code the margin on the reference rate and the maturity periods, AidData has taken the average of the interest margins {[(0.75% + 1.15%) / 2] = 0.95%} and the average of the maturity periods {[(3 + 7) / 2] = 5 years} to code as the margin of the reference rate and maturity period, respectively. 3. A 6-month PRIBOR rate was assumed. The average 6-month PRIBOR rate was 0.39%. Therefore, AidData has coded the interest rate as 0.39% + 0.95% = 1.34%.