Bank of China contributes $170 million USD to a $2.55 billion USD syndicated term loan for the Australia Pacific LNG (APLNG) 2019 Refinancing Project

Project narrative

On May 23, 2012, financial close was reached on the $12.893 billion USD ($13.23247 billion AUD) Australia Pacific LNG (APLNG) Project, which included $8.500 billion USD ($8.7238 billion AUD) in non-recourse debt (divided into three tranches) and $4.393 billion USD ($4.50867 billion AUD) in equity. As part of the financing, the Export-Import Bank of China entered into a $2.759 billion USD ($2.83164 billion AUD) direct loan agreement with Australia Pacific LNG Processing Pty Limited — a special purpose vehicle (SPV) and wholly owned subsidiary of Australia Pacific LNG Pty Limited (APLNG), itself a joint venture that, at the time of financial close, was between the United States' ConocoPhillips (42.5% equity), Australia's Origin Energy Limited (42.5% equity), and China Petroleum & Chemical Corporation (Sinopec) (15% equity) — for the APLNG Project. This loan carried a maturity period of 16 years and a final maturity period of May 23, 2028. While financial close was achieved on May 23, 2012, China Eximbank did not sign the definitive documentation due to the bank's internal process and procedures. China Eximbank then signed the final project finance document on June 8, 2012. Record ID#49908 captures the China Eximbank loan. In addition to the China Eximbank direct loan, a syndicate of 15 lenders — including the Bank of China (BOC) — entered into a $2.875 billion USD ($2.95070 billion AUD) syndicated loan agreement with Australia Pacific LNG Processing Pty Limited. This loan carried a maturity period of 16 years and a final maturity period of May 23, 2028. The interest rate on this commercial tranche would be LIBOR plus a margin of 250 basis points (bps) during the four-year construction period, with the margin then increasing to 275 bps for years one to eight, then 300 bps for years nine to 12, and then to 325 bps for years 13 to 16. The loan also carried a participation fee of 200 bps. BOC contributed $50 million USD to the $2.875 billion USD loan. Record ID#49909 captures BOC's contribution. Furthermore, the Export-Import Bank of the United States entered into a $2.866 billion USD ($2.94146 billion AUD) loan agreement with Australia Pacific LNG Processing Pty Limited. This loan carried a maturity period of 17 years and a final maturity date of May 23, 2029. This was the second largest single project loan in the US Ex-Im Bank's history. The sponsors — ConocoPhillips, Origin Energy, and Sinopec — provided shareholder guarantees to the lenders during the four-year construction phase, to be lifted when APLNG became operational. Additionally, each sponsor contributed to the $4.393 billion USD equity used in project financing: ConocoPhillips ($1.64735 billion USD; $1.69072 million AUD), Origin Energy ($1.64735), and Sinopec ($1.0983 billion USD; $1.12722 billion AUD). APLNG made its first principal and interest repayment on the debt in March 2017, and was scheduled to make bi-annual payments until March 2029 As of December 31, 2018, all amounts had drawn from the $8.5 billion USD facility. In September 2018, Australia Pacific LNG Processing Pty Limited completed a $1.4 billion USD United States Private Placement (USPP) bond facility; it used the proceeds of the notes to repay the $1.4 billion USD in debt to China Eximbank. As of December 31, 2018, all amounts had drawn from the $8.5 billion USD facility. Then, on March 28, 2019, financial close was reached on a deal in which a syndicate of 25 banks — including BOC, China Construction Bank Corporation (CCB), and the Industrial and Commercial Bank of China (ICBC) — provided a $2.55 billion USD term loan to Australia Pacific LNG Processing Pty Limited for Australia Pacific LNG (APLNG) 2019 Refinancing Project. This loan carried a maturity period of nine years, a maturity date of March 28, 2028, and an interest rate of ICE LIBOR plus a margin of 150 bps. The proceeds of this loan were used for the refinancing of the APLNG Project, namely repaying the remainder of China Eximbank debt and the commercial bank facility. BOC contributed $170 million USD, CCB contributed $170 million USD, and ICBC contributed $75 million USD to the loan syndicate. In addition to these three Chinese state-owned banks, the following lenders contributed the respective amounts to the loan syndicate: MUFG Bank, Ltd. ($109.55 million USD), Australia and New Zealand Banking Group (ANZ) ($170 million USD), BNP Paribas S.A. ($170 million USD), HSBC Bank Plc ($170 million USD), Mizuho Bank ($170 million USD), Oversea-Chinese Banking Corporation, Limited (OCBC Bank) ($170 million USD), Sumitomo Mitsui Banking Corporation (SMBC) ($170 million USD), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($75 million USD), DBS Bank ($75 million USD), Export Development Canada (EDC) ($148.77 million USD), National Australia Bank Limited (NAB) ($100 million USD), Société Générale S.A. (SocGen) ($100 million USD), Westpac Banking Corporation ($100 million USD), Bayfront Infrastructure Capital ($20 million USD), Caixabank, S.A. ($50 million USD), Crédit Agricole Group ($50 million USD), Norinchukin Bank (Nochu Bank) ($50 million USD), Siemens Bank GmbH ($56.68 million USD), Standard Chartered Bank PLC ($50 million USD), Sumitomo Mitsui Trust Bank, Limited (SMTB) ($30 million USD), Korea Development Bank (KDB) ($50 million USD), and United Overseas Bank Limited (UOB) ($50 million USD). Record ID#49966 captures BOC's contribution. Record ID#95283 captures CCB's contribution. Record ID#95284 captures ICBC's contribution. The APLNG Project was a coal seam gas (CSG) to liquefied natural gas (LNG) project intended to deliver cleaner energy. There were three major components of the project: additional development of gas wells and accompany infrastructure in the natural gas fields in the 17,000 square kilometer Surat and Bowen Basins in southwest and central Queensland; the construction of a 520 kilometer 52-inch high pressure gas transmission pipeline to transport the coal steam gas from the fields to an LNG facility on Curtis Island off the coast of Gladstone, Queensland; and the construction of a LNG facility and terminal on Curtis Island, with the first two 4.5 million tons per annum gas production trains capable of processing up to 9 million tons per annum. The project included centralized gas processing processing and compression stations and two water treatment facilities, Condabri Central (20 kilometers south of Miles) and Reedy Creek (130 kilometers northwest of Miles) in the Surat Basin region. The project had an expected service life of at least 30 years. Origin would operate the upstream portions, namely the gas fields and pipeline, while ConocoPhillips would operate the LNG facility. The LNG off-takers for the project would be Sinopec (7.6 million tons per annum over 20 years) and Kansai Electric Power Company (KEPCO) (1 million tons per annum over 20 years). Sinopec's off-take arrangement was the largest such agreement in Australia ever.