ICBC, BoC, CCB and Agricultural Bank of China contribute $307.7 million to $1 billion pre-export finance facility to Siberia Coal Energy Company (SUEK)

On May 17, 2017, Industrial Bank of China (ICBC), Bank of China (BoC), China Construction Bank (CCB), and Agricultural Bank of China joined a $1 billion syndicated pre-export finance (PXF) facility with Joint-Stock Company Siberian Coal Energy Company (SUEK JSC). These four banks contributed a combined total of $307,692,307.69 to the syndicated loan. The facility carried an interest rate of 5.125% (LIBOR plus 3.7% margin). It had two tranches with five and seven-year maturities. The PXF facility is secured by (collateralized with) international sales revenue. In February 2016, ING Bank NV and Unicredit Bank Austria AG began coordinating this syndicated loan deal. The leading international banks became the authorized leading arrangers of the transaction. The non-Chinese participants included: ING Bank NV (Loan Agent), Unicredit Bank Austria AG, Alfa-Bank JSC, Commerzbank AG, Rabobank London, Sberbank of Russia PJSC, Societe Generale Group represented by SGBT Asset Based Funding SA and PJSC ROSBANK, Intesa Sanpaolo Bank Ireland PLC and JSC Nordea Bank.

Additional details

1. The average 6-month LIBOR rate in May 2017 (when the Chinese banks joined the syndicate) was 1.425%, so the all-in interest rate has been estimated as 1.425% + 3.7% = 5.125%. 2. Joint-Stock Company Siberian Coal Energy Company (SUEK JSC) is the largest coal company in Russia. It is a private enterprise. 3. A pre-export finance (PXF) facility is an arrangement in which a commodity producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed. Due to to various international sanctions imposed upon Russia, PXF facilities are one of the fews ways in which commodity producers (borrowers) can borrow in foreign currency. 4. The individual contributions of ICBC, Bank of China, China Construction Bank, Agricultural Bank of China, ING Bank NV (Loan Agent), Unicredit Bank Austria AG, Alfa-Bank JSC, Commerzbank AG, Rabobank London, Sberbank of Russia PJSC, Societe Generale Group represented by SGBT Asset Based Funding SA and PJSC ROSBANK, Intesa Sanpaolo Bank Ireland PLC and JSC Nordea Bank to the syndicated loan are unknown. For the time being, AidData has estimated the contribution of the four Chinese state-owned banks by assuming that the thirteen lenders contributed equal amounts ($76,923,076.92) to the loan syndicate.

Number of official sources

2

Number of total sources

7