Narrative
Full Description
Project narrative
On March 12, 2018, eighteen lending institutions — including China Construction Bank (CCB), the Agricultural Bank of China (ABC), Bank of China (BoC), Deutsche Bank, UniCredit, Commerzbank, Intesa Sanpaolo, Credit Suisse, Citibank, Mizuho, Raiffeisen, Rosbank, Bank of America, and Caterpillar Financial Services — signed a syndicated pre-export finance (loan) facility agreement worth $1.055 billion with Siberian Energy Coal Company (SUEK) which is a part of IC SUEK LTD LLC. CCB reportedly contributed $75.36 million (captured via Record ID#66708), ABC reportedly contributed $75.36 million (captured via Record ID#66709), and BoC reportedly contributed $75.36 million (captured via Record ID#66710). The loan carried a 5-year maturity and an interest rate based on LIBOR plus a margin and it was collateralized with SUEK Group’s export revenues. The borrower was expected to use the proceeds of loan for refinancing and general corporate purposes. The legal adviser for the facility agreement was Norton Rose Fulbright. The facility was secured by the suretyship of the SUEZ, SUEKKuzbass, SUEK-Khakasia and Tugnuisky Opencast Mine and the guarantee of SUEK AG.
Staff comments
1. A pre-export finance (PXF) facility is an arrangement in which a commodity (e.g. oil) 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. 2. Siberian Coal Energy Company (SUEK) is Russia's largest coal company. It is a privately held company. Andrey Melnichenko has a 92.2% equity stake in SUEK.