Bank of China contributes $57.03 million AUD to a $399.23 million AUD syndicated loan for the Victoria International Container Terminal Project

Project narrative

On July 15, 2016, a syndicate of seven banks — including the Bank of China (BOC) — entered into a $399.23 million AUD ($299.53 million USD) syndicated loan agreement with Victoria International Container Terminal Limited (VICT) — an Australia-incorporated special purpose vehicle (SPV) and wholly owned subsidiary of ICTSI Oceania B.V. (IOBV), itself a subsidiary of Philippine port operator International Container Terminal Services, Inc. (ICTSI) — for the construction and development of the Victoria International Container Terminal Project at Webb Dock East at the Port of Melbourne, Victoria. The $399.23 million AUD syndicated facility was divided into a seven-year tranche (2023 maturity), a 10-year tranche (2026 maturity), and a 16-year tranche (2031 maturity). The interest rates for the tranches were based on Australian Bank Bill Swap Reference Rate (BBSY) plus an average margin of 3.1% per annum. The facility was secured by (i.e. collateralized against) IOBV's shares in VICT, all present assets of VICT (valued as of December 31, 2017 at $813 million AUD; $639.6 million USD, and future assets of VICT. Each lender, including BOC, contributed $57.03 million AUD ($42.79 million USD) to the loan syndicate. In addition to BOC, the following lenders contributed to this syndicated loan: Citibank N.A., KfW IPEX-Bank, Standard Chartered Bank, DBS Bank Ltd., Investec Bank Plc, and Cathay United Bank. Citibank, KFW IPEX, and Standard Chartered acted as mandated lead arrangers and bookrunners. BOC, DBS, and Investec acted as mandated lead arrangers. Cathay United acted as lead arranger. Finnvera, Finland's export credit agency, issued a guarantee for the portion of the debt used to purchase automatic cranes and software solutions from Finland's Cargotec Group. The proceeds of this facility were to be used by the borrower to construct the Victoria International Container Terminal at Webb Dock East at the Port of Melbourne in Victoria with a capacity of 2.5 million twenty-foot equivalent units (TEUs). The Port of Melbourne has two existing container terminals that share a port basin at the mouth of the Yarra River, each handling about 1.3 million TEUs annually, but are in a poor position for expansion because of the positioning of a turning basin and bridge before the entrance limiting the classes of ships that can be received. The new terminal, facing seawards, eliminated these difficulties. The new terminal's first berth had three cranes capable of handling post-Panamax ships with capacities of 8,000 TEUs. The container terminal was designed to be fully automated. VICT, ICTSI's first investment in Australia, won the 26-year concession to design, construction, commissioning, operation, maintenance, and financing of the Port of Melbourne new international container terminal and empty container park at Webb Dock. In early 2014, VICT awarded the engineering design works, including geotechnical investigations and construction phase services, to AECOM. Finland's Cargotec Group provided the automatic cranes and software solutions. BMD Constructions was responsible for earthworks, construction of pavements, wharf works, rail works, installation of drainage and electrical. The construction of the terminal was conducted in two phases. Phase One would be ready for commercial operations in the fourth quarter of 2016 and Phase Two would be ready for operations in 2017. Construction began in late 2014. Construction of Phase One was completed in a ceremony on December 14, 2016. Despite the opening of the port, construction work continued until January 2017.