Narrative
Full Description
Project narrative
On November 15, 2016, CMOC DRC Limited — a special purpose vehicle and wholly-owned subsidiary of China Molybdenum Co., Ltd. that is legally incorporated in Hong Kong — signed a $1.59 billion (RMB 11 billion) syndicated loan agreement with Bank of China, China CITIC Bank, China Minsheng Banking Corporation Limited, and China Development Bank to partially finance its $2.65 billion acquisition of a 56% ownership stake in the Tenke Fungurume copper-cobalt mine in the Democratic Republic of the Congo (DRC). The loan consisted of three tranches: a $450 million tranche from the Hong Kong Branch and Cayman Islands Branch of Bank of China (known as ‘Tranche A’), a $350 million tranche from the Zhengzhou Branch of China CITIC Bank and the Luoyang Branch of China Minsheng Banking Corporation Limited (known as ‘Tranche B’), and a $790 million tranche from China Development Bank (known as ‘Tranche C’). Tranche A, which is captured via Record ID#91890, carried the following borrowing terms: a 7-year maturity and an interest rate of 3-month LIBOR plus a 1.7% margin. Tranche B, which is captured via Record ID#91895, carried the following borrowing terms: a 7-year maturity and an interest rate of 3-month LIBOR plus a 2.2% margin. Tranche C, which is captured via Record ID#91897, carried the following borrowing terms: a 7-year maturity and an interest rate of 3-month LIBOR plus a 2.2% margin. The borrower was responsible for repaying the loan between March 15, 2018 and November 15, 2023. China Molybdenum Co., Ltd. pledged its 100% equity stake in CMOC DRC Limited to the lenders as a source of collateral; it also issued a corporate guarantee in support of the loan. CMOC DRC Limited’s acquisition of a 56% stake in the Tenke Fungurume copper-cobalt mine from Freeport-McMoRan — by purchasing Freeport-McMoRan’s 70% ownership stake in TF Holdings Limited (TFHL), a Bermuda-based holding company that owns an 80% ownership stake in Tenke Fungurume Mining S.A. (“Tenke”) in the DRC — was successfully completed on November 17, 2016.
Staff comments
1. The Chinese project title is 洛钼集团完成26.5亿美元刚果并购交易 or 洛钼控股26.5亿美元收购刚果铜钴矿公司等筹. 2. China Molybdenum Co., Ltd. retained Citigroup Global Markets Inc. as financial advisor, Osler, Hoskin & Harcourt LLP as lead legal advisor, and Herbert Smith Freehills LLP, King & Wood Mallesons LLP and Covington & Burling LLP as legal advisors. 3. AidData has estimated all-in interest rate for Tranche A by adding 1.7% to the average 3-month LIBOR rate in November 2016 (0.908%). AidData has estimated all-in interest rate for Tranches B and C by adding 2.2% to the average 3-month LIBOR rate in November 2016 (0.908%). 4. Given that the loan was contracted on November 15, 2016 and the borrower was responsible for repaying the loan between March 15, 2018 and November 15, 2023, the loan’s implied grace period is 1.33 years. 5. The monetary value of the contributions made by China CITIC Bank and China Minsheng Banking Corporation Limited to the Tranche B are unknown. For the time being, AidData assumes equal contributions ($175 million) across the 2 participants in Tranche B. 6. One source (https://kwm-stage-06.adobecqms.net/content/kwm/us/en/people/david-lam.html and https://www.dropbox.com/s/1c8nv3x1me32cjz/David%20Lam%20-%20KWM.pdf?dl=0) suggests that China Eximbank also supported the transaction. This issue warrants further investigation.