Narrative
Full Description
Project narrative
On May 20, 2020, PJSC Uralkali — a Russian potash producer — signed a $665 million syndicated pre-export finance (PXF) facility agreement with a syndicated of banks. Then, in September 2020, three banks joined the lending syndicate and added $275 million, bringing the total value of the PXF facility to $940 million. The 13 members of the lending syndicate included Bank of China, Crédit Agricole Corporate & Investment Bank, ING, Mitsubishi UFJ Financial Group, Russian Regional Development Bank (RRDB), SGBTCI, Société Générale, Commerzbank Aktiengesellschaft, Filiale Luxemburg, Mizuho Bank Ltd, Bank ICBC (JSC), J.P. Morgan Securities PLC, and AO Raiffeisenbank. The PXF facility carries a maturity of 5 years and an annual interest rate of LIBOR plus a 2.20% margin. The proceeds from the facility were to be used by the borrower for general corporate purposes, including debt refinancing. Bank of China’s contribution to the syndicate is captured via Record ID#87128. ICBC’s contribution to the syndicate is captured via Record ID#92655.
Staff comments
1. The average 6-month LIBOR rate in May 2020 was 0.686%, so the all-in interest rate has been calculated as 0.686% + 2.20% = 2.886%. 2. Uralchem — a private company — previously owned 46% of Uralkali, and acquired a controlling stake of 81.47% in November 2020. In February and March 2021, Uralkali acquired the remaining 18.53% of shares from the other shareholder Rinsoco, kept at a subsidiary level as treasury shares, meaning Uralchem now effectively owns 100% of Uralkali. 3. A pre-export finance (PXF) facility 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. 4. Mandated Lead Arrangers and Bookrunners of the pre-export finance facility were Bank of China Limited, Crédit Agricole Corporate & Investment Bank, ING, Mitsubishi UFJ Financial Group, Russian regional development bank, SGBTCI and Société Générale. Commerzbank Aktiengesellschaft, Filiale Luxemburg and Mizuho Bank Ltd joined the facility as Mandated Lead Arrangers, J.P. MORGAN SECURITIES PLC and AO Raiffeisenbank as Lead Arrangers, and Bank ICBC (JSC) as Non-Lead Arranger. ING acted as Coordinator and Documentation Agent. Crédit Agricole Corporate & Investment Bank acted as Facility Agent and Security Agent. 5. The size of Bank of China’s contribution to the lending syndicate is unknown. For the time being, AidData assumes that all 13 members of the lending syndicate contributed equal amounts ($72.3 million).