Narrative
Full Description
Project narrative
In 2018, ACWA Power Renewable Energy Holding Limited (APREH), a fully-owned subsidiary of ACWA Power, entered into a convertible loan agreement with the CVXF Inc. (a subsidiary of Silk Road Fund or SRF), which provided the lender with an option to convert all or a portion of the loan’s principal amount into shares at an agreed conversion price. Under the subject agreement, APREH borrowed a sum of SAR 1,361.3 million, which was advanced to ACWA Power Global Services (“APGS”), a fully owned subsidiary of ACWA Power, through an intra-group shareholder advance agreement. The convertible loan agreement provided SRF an option to convert all or a portion of the loan’s principal amount into the shares of APREH at an agreed conversion price and with a fixed interest rate of 4.3% for the first 18 months and 3.4% for the rest of the outstanding period. Upon successful closure of the transaction, SAR 580.6 million was converted to investment (equity), SRF acquired a 49% stake in APREH, and the remaining outstanding balance of SAR 773.1 million was disclosed as due to a related party as of December 31, 2020. The total outstanding loan balance was repayable within 60 months from first utilization in the event of non-conversion. The debt was guaranteed by ACWA Power (i.e. recourse to ACWA Power). Renewable portfolio projects that were included in the APREH acquisition transaction are Ben Ban PV IPP [three projects], Mafraq PV IPP, Risha PV IPP, Khalladi Wind IPP, Shuaa Energy PV IPP, Bokpoort CSP IPP. The Mafraq PV independent power project is located in the Hashemite Kingdom of Jordan. The Risha PV independent power project is located in the Hashemite Kingdom of Jordan. The Khalladi Wind Farm is located in the Kingdom of Morocco. The Shuaa Energy PV independent power project is located in United Arab Emirates. The Bokpoort CSP independent power project is located in South Africa. Due to a lower probability of additional debt-to-equity conversion in the future, APREH fully prepaid the outstanding balance of the convertible loan in mid-2022.
Staff comments
1. One source (https://www.dropbox.com/s/cwy13xaxkgr7xdj/Asiamoney%20Middle%20East%20and%20Africa_%20Best%20Individual%20BRI%20Project%20or%20Initiative%20in%20the%20Region%202020.pdf?dl=0) suggests that Bank of China and other Chinese lenders supported this transaction. This issue warrants further investigation. 2. AidData has estimated the interest rate by taking the midpoint between 3.4% and 4.3% 3. AidData has estimated this transaction was completed in 2018, as the loan was issued then.