ICBC contributes to $700 million syndicated pre-export finance facility with Kaz Minerals for general corporate and trade financing purposes (Linked to Project ID#92604)

On January 28, 2020, KAZ Minerals PLC — a copper company focused on large-scale, low-cost open pit mining in Kazakhstan — announced that it had completed an amendment and extension of a previously signed syndicated pre-export finance (PXF) facility agreement. There were 19 members of the lending syndicate: Deutsche Bank AG, ING Bank NV, Société Générale, ABN AMRO Bank NV, Bank of China Limited, Crédit Agricole Corporate and Investment Bank, Credit Suisse AG, the London Branch of the Industrial and Commercial Bank of China (ICBC), Natixis, PJSC «SOVCOMBANK», Bank of Montreal, DZ Bank AG, Intesa SanPaolo S.P.A., Mizuho Bank, Sumitomo Mitsui Banking Corporation, HSBC Bank PLC, KFW Ipex-Bank GMBH, Raiffeisen Bank International AG and Citibank. The new PXF agreement represented a net increase of $700 million above the $300 million outstanding under the existing PXF facility and the KAZ Minerals PLC expected to fully draw down the facility by the end of February 2020. The new PXF agreement includes a number of modifications to the previous PXF agreement, including: (a) an extension to the maturity profile by 3.5 years, from June 2021 until December 2024; (b) two annual extension options, exercisable on the first and second anniversary dates of signing, which, if exercised, would extend final maturity of the facility to December 2025 or December 2026 respectively (the “Extension Options”); (c) a revised repayment profile with monthly principal repayments commencing in January 2021 and continuing over a four-year period until December 2024, or over a six-year period to December 2026 if the Extension Options are exercised; (d) a balloon repayment of one-third of the facility amount ($333 million) if final maturity occurs in December 2024, or to be amortized during 2025 and 2026 if the Extension Options are exercised; (e) a reduced interest margin set initially at 2.50% above US dollar LIBOR (previously set at 3.00% under the existing PXF facility). The margin is variable during the life of the facility ranging between 2.25% and 3.50% above US dollar LIBOR, depending on the ratio of net debt to EBITDA, to be tested semi-annually; and (f) increased headroom under financial covenants. The proceeds of the PXF facility are to be used by KAZ Minerals PLC for general corporate purposes and trade financing purposes. Bank of China’s contribution to the 2020 PXF facility is captured via Project ID#92604. ICBC's contribution to the 2020 PXF facility is captured via Project ID#92605.

Additional details

1. The bank syndicate increased from 12 to 19 lenders. The Mandated Lead Arrangers are Deutsche Bank AG, ING Bank NV, Société Générale, ABN AMRO Bank NV, Bank of China Limited, Crédit Agricole Corporate and Investment Bank, Credit Suisse AG, ICBC London, Natixis and PJSC «SOVCOMBANK». Other lenders in the facility are Bank of Montreal, DZ Bank AG, Intesa SanPaolo S.P.A., Mizuho Bank, Sumitomo Mitsui Banking Corporation, HSBC Bank PLC, KFW Ipex-Bank GMBH, Raiffeisen Bank International AG and Citibank N.A. Deutsche Bank AG continues as the facility agent and ING Bank is the security trustee. 2. The legal support under the transaction was provided by the international legal companies Hogan Lovells and Linklaters. 3. AidData has estimated the all-in interest rate by adding 2.5% to the average 6-month LIBOR rate in January 2020 (1.839%). 4. A pre-export finance (PXF) facility an arrangement in which a commodity (e.g. oil) 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. 5. The size of ICBC’s contribution to the lending syndicate is unknown. For the time being, AidData assumes equal contributions across all 19 members of the syndicate ($36,842,105). 6. It appears that the PXF facility was first signed in 2010. However, this issue requires further investigation.

Number of official sources

4

Number of total sources

8