ICBC contributes to a £100 million GBP revolving credit facility to Highland Group Holdings to support its retail activities and seasonal working capital requirements (Linked to Record ID#89586, #89376, #92133, #92144, and #92145)

Project narrative

In 2014, the Jiangsu Branch of the Bank of China (BOC), working with BOC's London and Macau Branches and other Chinese and foreign banks, provided a £80 million GBP loan to Nanjing Xinjiekou Department Store Company (Cenbest) to support the £480 million GBP ($742 million USD; €587 million EUR) acquisition of an 89% ownership stake in Highland Group Holdings Ltd, the owner of British department store House of Fraser Plc (HOF), as captured by linked Record ID#89586. Additionally, Jiangsu Branch of BOC provided a £300 million GBP loan for debt refinancing purposes for Highland Group Holdings Ltd. (captured via Record ID#89376). The acquisition was signed in early April 2014 and was described as the largest-ever overseas acquisition by a Chinese company in the retail industry. At the time, House of Fraser had serious financial liability issues, including significant debt. Still, Nanjing Xinjiekou, which was controlled by Chinese private conglomerate Sanpower Group, planned to inject capital in HOF, bring it into the China market, and use the acquisition to enhance its reputation. The sale of the shares in Highland Group was completed on September 2, 2014. Then, on August 5, 2015, the London Branch of the International and Commercial Bank of China (ICBC) and HSBC entered into a three-year £100 million GBP syndicated revolving credit facility (RCF) with Highland Group Holdings Ltd. for retail activities and seasonal working capital requirements as part of its debt refinancing. This RCF carried the following terms: a maturity period of three years with an option to extend by one additional year and a maturity date of July 29, 2018. The RCF included two maintenance covenants, a leverage ratio and a fixed charged ratio, and was secured by (i.e. collateralized against) the assets of the Highland Group Holdings' retail business. The RCF incurred commitment fees at market rates. HSBC Corporate Trustee Company (UK) Limited served as the security agent of this loan. This RCF is captured via Record ID#92143. As of January 30, 2016, none of this RCF had been drawn down. Additionally, on August 5, 2015, the London Branch of ICBC and HSBC Bank plc entered into a £125 million GBP syndicated term loan agreement with Highland Group Holdings Ltd. to support its retail activities as part of its debt refinancing. The term loan carried the following terms: a maturity of three years with an option to extend by one additional year and a maturity date of July 29, 2018. The term loan included two maintenance covenants, a leverage ratio and a fixed charged ratio, and was secured by (i.e. collateralized against) the assets of the Highland Group Holdings' retail business. HSBC Corporate Trustee Company (UK) Limited served as the security agent of this loan. This term loan is captured via Record ID#92133. As of January 30, 2016, the entire value of the term loan was outstanding. £93.8 million GBP were a fixed financial liability hedged onto a fixed rate, and £31.2 million GBP was based on a floating interest rate, LIBOR. In 2018, House of Fraser (UK & Ireland) Limited (the new name for Highland Group Holdings Ltd.) exercised the option to extend the maturity period of both the term loan and the RCF, bringing them to a new final maturity date of July 29, 2018. In March 2018, Nanjing Xinjiekou announced that it was selling a 51% stake in Highland Group Holdings Ltd to Chinese tourism development company Wuji Wenhua. However, this deal appears to have fallen through. In September 2017 and late March 2018, Sanpower injected £15 million GBP into HOF (that is, a total of £30 million GBP was injected) to shore up HOF's financial status and pay off landlords and concessionaires. At the forefront of HOF's debt issues were the £125 million GBP term loan and £100 million GBP RCF. By June 2018, HOF was on the verge of collapse, threatening its 59 stores and 17,000 employees, and was engaged with its negotiations with ICBC and HCBC to avoid administration. Later that month, HSBC and ICBC pledged to extend the maturity length of the term loan and RCF by over a year, to the fourth quarter of 2020, on the condition that HOF's landlords approved a company voluntary arrangement (CVA) which included the closure of 31 stores and rent cuts on another 10 and that HOF obtained £70 million from C.banner International Holdings Limited, a Hong Kong based footwear retail firm and owner of Hamleys toy store, which was expected to purchase a 51% in HOF and inject the new capital upon approval of the CVA. The pledged extension of the term loan is captured via Record ID#92144; the pledged extension of the RCF is captured via Record ID#92145. The CVA was approved. However, the C.banner International rescue plan collapsed in early August 2018. On August 10, 2018, HOF was placed in administration with Ernst & Young Global Limited as the administrators. Later that day, British billionaire Mike Ashley’s Sports Direct, owner of 11% of the shares in HOF, bought the remaining shares for £90 million GBP, leaving Nanjing Cenbest with nothing.