Narrative
Full Description
Project narrative
On October 17, 2011, China National Chemical Corporation (CNCC) completed its acquisition of Makhteshim Agan Industries (MAI) through one of its subsidiaries: the China National Agrochemical Corporation. It purchased 53% of MAI's publicly held shares and 7% of MAI's shares held by Koor Industries Ltd. CNCC’s investment in MAI totaled $2.4 billion USD dollars, the largest investment project between China and Israel. $1.44 billion USD of the $2.4 billion USD investment was used to purchase a 60% equity stake in MAI. CNCC’s owner, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), contributed RMB 800 million as an equity investment (as captured via Record ID#41486). The remainder came from an EUR 952,000,000 non-recourse credit facility that the Export-Import Bank of China (China Eximbank) extended to CNCC (captured via Record ID#71232). The credit facility was guaranteed with an encumbrance on MAI shares owned by CNCC. Record ID#41488 captures the estimated financial commitment of China Eximbank, Record ID#100731 captures the estimated financial commitment of China Construction Bank, and Record ID#100732 captures the estimated financial commitment of Bank of China. Apart from the $1.44 billion official investment, the remaining funds needed to make the $2.4 billion official investment in MAI were lent to MAI’s previous owner, Koor Industries Ltd., in the form of a $960 million overseas investment loan by a syndicate of three Chinese state-owned banks (as captured via Record ID#41488). China Eximbank was the lead arranger, but China Construction Bank (CCB) and Bank of China (BOC) also participated in the syndicate. As part of CNCC's acquisition of MAI, CNCC provided Koor Industries Ltd. with a non-recourse syndicated loan of $960 million. The loan was repayable in cash or in Koor Industries' shares in MAI. The loan carried the following terms: a maturity period of 7 years, a grace period of 4 years, and an interest rate of 5.095% (6-month LIBOR plus 4.5% margin). Its repayment was guaranteed with a lien on Koor Industries' remaining MAI shares (40%). On June 27, 2011, the board of directors of Koor Industries Ltd. approved the $960 million USD loan agreement with CNCC and China Eximbank. Then, on October 17, 2011, the loan agreement became effective following CNCC's successful acquisition of 60% of shares in MAI. MAI is a major Israeli agrochemical company, producing herbicides, pesticides, and many kinds of drugs. China National Agrochemical Corporation is China’s largest agrochemical company. With this deal, ChemChina became the sixth largest pesticide manufacturer in the world.
Staff comments
1. Makteshim Agan Industries (MAI), was renamed ADAMA Agriculture Solutions Ltd. in 2014 (see pg.11 of "沙隆达A:拟收购以色列ADAMA Agricultural Solutions Ltd.股权项目资产评估报告"). 2. The loan carried an interest rate of 6-month LIBOR + a 4.5% margin. The average 6-month LIBOR rate in October 2011 was 0.595%. Therefore, AidData has coded the interest rate as 0.595% + 4.5%, or 5.095%. Additionally, the interest rate was subject to tax deduction and fees (see pg.45-56 of "IDB 2011 Report"). 3. The individual contributions of China Eximbank, China Construction Bank, and Bank of China to the $960 million syndicated loan are unknown. For the time being, AidData assumes equal contributions ($320 million) across all three known members of the syndicate.