Bank of China contributes $114.166 million USD to a $1.4 billion USD syndicated term loan for Smith & Nephew PLC to finance its acquisition of ArthroCare (Linked to Record ID#92178)

Project narrative

On March 24, 2014, a syndicate of 13 banks — including the London Branch of the Bank of China (BOC) — signed a $2,400,000,000 USD syndicated term and revolving facilities (loan) agreement with Smith & Nephew PLC, a British multinational medical equipment manufacturer. Under this $2.4 billion USD debt financing agreement, there were two tranches: a $1,000,000,000 USD multi-currency revolving credit facility (RCF), known as 'Facility A', and a U.S. dollar-denominated $1,400,000,000 USD term loan facility, known as 'Facility B’. The purpose of the RCF tranche was general corporate purposes (such as working capital requirements, acquisitions, share buy-backs, and special dividend payments) and the refinancing of an existing $1 billion USD RCF dated December 9, 2010. The purpose of term loan was the financing of the cash consideration to acquire American medical technology company ArthroCare Corporation, the financing of the costs and expenses incurred by Smith & Nephew or its subsidiaries associated with the acquisition, and the refinancing of certain existing debts of ArthroCare Corporation. The RCF carried the following terms: a maturity of five years with options to extend by one and/or two years (final maturity date: March 24, 2019), and an interest rate based on LIBOR (or, if denominated in euro, EURIBOR), plus a margin. The initial margin would be 0.35% per annum, which, after the delivery of a Compliance Certificate pursuant to Clause 18.2 (Compliance Certificate), would be changed to be based on the Ratio of Consolidated Total Net Borrowings to earnings before interest, taxes, depreciation, and amortization (EBITDA); if the ratio were greater than 2.25:1, the margin would be 0.70%; if the ratio were less than or equal to 2.25:1 but greater than 1.50:1, the margin would be 0.50%; and if the ratio were less than or equal to 1.50:1, the margin would be 0.35%. If the company were to fail to provide a Compliance Certificate or was in default, the margin would be 0.70%. The term loan carried the following terms: a maturity period of approximately 22 months (~1.84 years), a final maturity date of February 3, 2016, and an interest rate based on LIBOR (or, if denominated in euro, EURIBOR) and a margin. The margin, until six months after the date of the initial loan agreement, would be 0.50% per annum; from six months after the date of the initial loan agreement until 12 months after the date of the initial loan agreement, the margin would be 0.60% per annum; from 12 months after the date of the initial loan agreement until the date 18 months after the date of the initial loan agreement, the margin would be 0.70% per annum; and from 18 months after the date of the initial loan agreement to the final maturity date of February 3, 2016, the margin would be 0.85% per annum. Additionally, after the delivery of a Compliance Certificate, the margin would be increased above the relevant rate based on the Ratio of Consolidated Total Net Borrowings to earnings before interest, taxes, depreciation, and amortization (EBITDA); if the ratio were greater than 2.25:1, the margin would be increased by 0.30%; if the ratio were less than or equal to 2.25:1 but greater than 1.50:1, the margin would be increased by 0.15%; and if the ratio were less than or equal to 1.50:1, the margin would be 0.00%. If the company were to fail to provide a Compliance Certificate or was in default, the margin would be increased by 0.30%. In addition to the London Branch of BOC, the following lenders contributed to this syndicated term and revolving facilities agreement: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Bank of America Merrill Lynch International Limited, The Bank of Tokyo- Mitsubishi UFJ, Ltd. (BTMU), HSBC Bank plc, Mizuho Bank, Ltd., National Australia Bank Limited (NAB), The Royal Bank of Scotland plc (RBS), the London Branch of Société Générale S.A., Sumitomo Mitsui Banking Corporation (SMBC), Wells Fargo Bank International Unlimited Company (WFBI), and the London Branch of Deutsche Bank AG. All participants served as Mandated Lead Arrangers, and RBS served as the Facility Agent. Smith & Nephew served as a guarantor for these agreements; it also provided a negative pledge. All lenders, including the London Branch of BOC, contributed $76,923,076.92 USD to the RCF, excepting JPMorgan Chase Bank, N.A. and Barclays Bank PLC, which contributed $76,923,076.94 USD to it. 10 lenders, including the London Branch of BOC, contributed $114,166,666.67 USD to the term loan; Barclays Bank PLC and JPMorgan Chase Bank, N.A. each contributed $114,166,666.65 USD to the term loan, while the London Branch of Deutsche Bank contributed $30,000,000.00 USD. Record ID#92183 captures the London Branch of BOC's $114,166,666.67 USD contribution to the $1 billion USD term loan. Record ID#92178 captures the London Branch of BOC's $76,923,076.92 USD contribution to the $1 billion USD RCF. Smith & Nephew successfully acquired ArthroCare on May 29, 2014 for a cash consideration of $1.5 billion USD.