China Construction Bank (New Zealand) contributes to a $257.8 million NZD syndicated loan for the Central Plains Water Enhancement Scheme (CPWES) (Linked to Record ID#91827)

Project narrative

In 2013, a two-bank syndicate — ANZ Bank New Zealand Limited and Westpac Banking Corporation — entered into a syndicated $140 million NZD loan facility agreement with Central Plains Water Limited (CPWL) — a New Zealand-incorporated special purpose vehicle — for the Stage 1 of the Central Plains Water Enhancement Scheme (CPWES). This loan carried a maturity period of eight years and a final maturity date of November 30, 2021. Then, in 2018, China Construction Bank (New Zealand) Limited (CCB NZ) joined the syndicated Term Loan and Construction Facility with CPWL for Stage 1 of CPWES with a contribution of approximately $87,623,096 NZD, raising the facility to $257,877,596 NZD. ANZ Bank New Zealand Limited and Westpac both remained as lenders. This loan's maturity date of November 30, 2021 remained unchanged. Record ID#91805 captures CCB NZ's contribution. CPWL was a limited liability company established to advance and own CPWES. CPWL has 401 farmer shareholders, who are the owners of properties in the area between the Malvern foothills, the Rakaia River, State Highway 1, and the Waimakariri River on the South Island that would receive irrigation from the CPWES. CPWL operates on co-operative principles, and its shareholder include dairy, cropping and beer, and sheep farmers. CPWL also raised $38 million NZD in equity. Inn May 2016, CPWL used $101 million NZD from the syndicated facility, $59 million NZD from a loan from Crown Irrigation Investments Limited (CIIL), and $34 million NZD in equity to finance the design and construction of Stage 2 of CPWES, and it raised another $33 million NZD from the syndicated facility and $12 million NZD in equity. Additionally, the Selwyn District Council provided a $5 million NZD loan for the project, while New Zealand's Ministry for Primary Industries' irrigation accelerated fund contributed $5.7 million NZD. The CPEWS project sought to construct, in three stages between 2014 and 2018, an irrigation scheme in Selwyn District, Canterbury capable of irrigating 63,000 hectares of farmland between the Rakaia and Waimakariri Rivers operated CPWL. It was the largest irrigation scheme in New Zealand's South Island, valued at $422 million NZD. In early 2019, after the completion of construction, CPWL entered into negotiations to refinance its debts. Refinance, while not necessary until 2021, was sought because CPWL's debt structure precluded the implementation of the equalization of water use charges and constrained the management of the Scheme. Then, in March 2020, a syndicate of four lenders — CCB (NZ), ANZ Bank, Westpac, and Coöperatieve Rabobank U.A. (Rabobank) — entered into a $239,564,683 NZD syndicated Term Loan Facility agreement with CPWL for the Central Plains Water Enhancement Scheme Refinancing Project. The carried a maturity period of five years, a final maturity date of April 2, 2025, and a variable interest rate. This loan was secured by (i.e. collateralized against) the assets of CPWL by a General Security Agreement that applied to all of CPWL's assets, mortgages, and all land interests, including easement rights, held by CPWL, in favor of ANZ Bank New Zealand, the Security Trustee. The proceeds were used by the borrower to roll its various debts rolled into a consolidated single debt with the constraints imposed by the Crown Irrigation Investments removed (as CIIL was removed as a creditor with the refinancing). This refinancing was expected to save CPWL $1 million NZD annually for the next five years. Record ID#91827 captures CCB (NZ)'s contribution. Alongside the $239.5 million NZD syndicated loan, the Accident Compensation Corporation (ACC) provided a $87,776,362 NZD fix rate term loan facility to CPWL, secured by the assets of CPWL with a maturity period of 15 years, a final maturity date of April 2, 2035, and a nominal interest rate at inception of 4.75%. ACC's loan attracted criticism. Rosalie Snoyink, of the Malvern Hills Protection Society, was quoted as saying that “CPW Ltd is a private company so it is disappointing to learn that more public funding is required to keep the CPW scheme afloat." Greenpeace criticized ACC, a New Zealand Crown entity for supporting environmentally harmful intensive dairy farming via its loan for CPWES; Greenpeace had previously launched a protest at the project site in 2017. Canterbury, host of nearly two-thirds of New Zealand's irritated land, is known for its dairy industry. Between 1990 and 1990, the number of cattle in Canterbury grew from 113,000 animals to 1.3 million; various studies and reports have that increased pollution has followed the rise in livestock, with over a third of Canterbury's rivers being rated as "poor" for swimming and concerns about high nitrate concentrations in the area's drinking water.