ICBC provides $40 million pre-export finance facility to Pan American Energy

On December 12, 2018, Industrial and Commercial Bank of China (ICBC) signed a $40 million pre-export finance (PXF) facility agreement with Pan American Energy. The loan carries a 2-year maturity and an unknown interest rate.

Additional details

1. Pan American Energy is a leading global multi-source energy company. In 2017, the company’s shareholders — Bridas Corp. and BP — consolidated their interests in Pan American Energy and AXION Energy to form a single company called Pan American Energy Group. Today Pan American Energy (PAE) has positioned itself as Argentina’s largest private producer, employer and investor in the energy industry and conducts operations in Argentina, Mexico, Bolivia and Uruguay. PAE’s operations span the upstream, midstream and downstream operations and thermal and renewable electric power sectors of the energy business. In the downstream business, PAE operates the Campana Argentina refinery. As for its retail operations, the company sells fuels through the brand AXION Energy and lubricants through the brand Castrol, in its 740 gas stations in Argentina and Uruguay. Axion presently has a 15% share of the Argentine fuels market. The company currently explores and produces oil and gas in Argentina, Bolivia and Mexico in conventional and unconventional reservoirs, both onshore and offshore. 2. A pre-export finance (PXF) facility is an arrangement in which a commodity producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed. 3. The Spanish name of the December 12, 2018 agreement is Contrato de pre financiación de exportaciones con ICBC.

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