China Eximbank provides $128 million buyer’s credit loan to Telekom Romania to finance the acquisition of equipment for its 3G phone network

Project narrative

On June 13, 2004, the Export-Import Bank of China (China Eximbank) and Telekom Romania (also known as Romtelecom, Cosmote România, and POSTelecome) signed a $128 million buyer’s credit agreement The loan carried an 11 year maturity, but its interest rate and grace period are unknown. The borrower was expected to use the loan proceeds to finance a commercial contract with ZTE and China Unicom. The Government of Romania did not issue a sovereign guarantee in support of the loan, but it did receive a guarantee from Banca Comercială Română. The loan agreement also reportedly included a clause that granted ZTE and China Unicom an option to buy a 29 percent ownership take in Telekom Romania in the future. The purpose of this project was to finance the acquisition of equipment for its 3G phone network. The project would include the design and provision of a full range of solutions and engineering services covering the whole country of Romania. It is planned to be completed in three phases within three years. In addition, at the request of Romania, ZTE Corporation and China Unicom will jointly participate in the operation and management of the project as a strategic partner. However, on November 10, 2005, an employee of China Unicom revealed that, due to political changes in Romania, the project had not been implemented, and the Chinese personnel originally scheduled to be dispatched to Romania as senior consultants had not yet been sent.