Bank of China participates in $159.25 million syndicated loan for Hongshi-Shivam Cement Plant Construction Project

In September 2018, Hongshi-Shivam Cement Pvt. Ltd. (红狮希望水泥私人有限公司) — a special purpose vehicle and joint venture of Hong Kong Red Lion Cement no 3 (70% ownership stake) and Shivam Holding Pvt. Ltd. (30% ownership stake) — obtained two syndicated loans from Chinese banks and Nepali banks for a $360 million Hongshi-Shivam Cement Plant Construction Project: a $159.25 million syndicated loan from three branches of Bank of China and China Minsheng Bank and a NPR 16 billion ($140.48 million) syndicated loan from NMB Bank, Nepal Investment Bank, Prabhu Bank, Everest Bank, and Nepal SBI Bank. The borrowing terms of the loans are unknown. However, it is known that the borrower purchased a credit insurance policy from Sinosure to support the syndicated loan from the Chinese banks. It is also known that Bank of China and China Minsheng Bank issued unconditional and irrevocable bank guarantees worth $42.87 million each in support of the syndicated loan from the Nepali banks. The guarantees are valid for the loan’s entire repayment tenure. The purpose of the project was to construct a cement factory in Sardi, 12km southwest of Dumkibaas in Nawalparasi district. At full capacity, the factory was expected to produce 6,000 tons per day clinker and cement (i.e 120,000 cement bags per day). The factory was also expected to be self producing 12MW of electricity through waste heat recovery out of the total power required of 50MW. Construction began in January 2017 and trial production activities began in May 2018. However, the first loan disbursement of NPR 1 billion (through the syndicated loan from the Nepali banks) did not take place until November 2018. The cement factory was originally expected to go into production by April 2018, However, the project faced implementation problems and delays. The cement factory was ultimately connected to the electricity grid on November 13, 2022.

Additional details

1. The Chinese project title is 红狮水泥尼泊尔水泥项目. 2. Hongshi Shivam Cement is a joint venture of Hong Kong Red Lion Cement no 3, a subsidiary under Hongshi Holding Ltd with 70% stake and Shivam Holding Pvt. Ltd. a subsidiary under Shivam Cement Limited with 30% shareholding. 3. In September 2017, the Investment Board of Nepal had signed a project investment agreement worth $359.2 million (approximately Rs36.8 billion) with Hongshi-Shivam Cement, to set up a mega cement factory in Nepal. 4. China Minsheng Bank is a private bank. 5. The individual contributions of three Bank of China branches and China Minsheng Bank to the loan syndicate are unknown. For the time being, AidData assumes equal contributions to the $159.25 million loan ($39.8125 million) across the 4 known participants in the loan syndicate. As such, the estimated contribution of the Bank of China branches is $119,437,500.

Number of official sources

1

Number of total sources

14