Narrative
Full Description
Project narrative
On April 6, 2017, BHR Newwood Investment Management Limited (BHR) — a special purpose vehicle incorporated in the British Virgin Islands and wholly-owned subsidiary of CMOC Limited, which in turn is a wholly-owned subsidiary of China Molybdenum Co., Ltd — and China Molybdenum Co., Ltd. signed a $700 million syndicated loan agreement with the Henan Branch of China Construction Bank Corporation and the Shanghai Branch and Tianshan Subbranch of China Merchants Bank Co., Ltd. to partially finance its $1.15 billion acquisition of a 24% ownership stake in the Tenke Fungurume copper-cobalt mine. China Construction Bank Corporation served as the mandated lead arranger, bookrunner, agent and security agent and contributed $600 million the loan syndicate. Its contribution is captured via Record ID#91899. China Merchants Bank Co., Ltd. contributed $100 million to the syndicate. Its contribution is captured via Record ID#91902. The loan carried the following borrowing terms: a 7-year maturity an interest rate that ranged between 3-month LIBOR plus a 2.5% margin and 3-month LIBOR plus a 2.64% margin. The borrower was responsible for repaying the loan between July 6, 2019 and April 6, 2024. China Molybdenum Co., Ltd. issued a corporate guarantee in support of the loan. BHR’s acquisition of a 24% stake in the Tenke Fungurume copper-cobalt mine from Lundin Mining Corporation — by purchasing Lundin Mining Corporation’s ownership stake in Lundin DRC Holdings Ltd., a Bermuda-based holding company that holds a 30% interest in TFHL [TF Holdings Limited, a Bermuda exempted company], which in turn holds an 80% interest in TFM [Tenke Fungurume Mining S.A., a public limited liability company under the laws of the DRC], which in turn holds the Tenke Fungurume Mining Complex — was successfully completed on April 20, 2017.
Staff comments
1. Some sources indicate the face value of the loan was $690 million rather than $700 million. This issue warrants further investigation. 2. AidData has coded this transaction as a collateralized loan because China Construction Bank Corporation was selected as the security agent (i.e. collateral agent) for the loan. When lenders take collateral as security for their loans, a collateral/security agent is often appointed to enforce rights against the collateral in the event of the borrower's default under the loan. 3. Given that the loan was contracted on November 17, 2016 and the borrower was responsible for repaying the loan between July 6, 2019 and April 6, 2024, the loan’s implied grace period is 1.625 years. 4. AidData has estimated all-in interest rate by adding 2.57% (the midpoint between 2.5% and 2.64%) to the average 3-month LIBOR rate in April 2017 (1.159%).