Bank of China participates in $3.1 billion syndicated pre-export finance (PxF) facility with Metalloinvest for general corporate and refinancing purposes in April 2011

On April 6, 2011, three wholly owned subsidiaries of Metalloinvest — JSC Lebedinskiy GOK, JSC OEMK and JSC Holding Company Metalloinvest — signed a $3.1 billion syndicated pre-export finance (PxF) facility agreement. The PxF facility (loan) includes a 5-year tranche and a 7-year tranche and an interest rate of LIBOR plus a 2.25% margin. The borrower was expected to use the proceeds of the loan to refinance existing indebtedness (including a $1.6 billion term loan facility signed in July 2008) and for general corporate purposes (including trade finance). BNP Paribas and Deutsche Bank served as IMLAs and bookrunners. Mandated lead arrangers (MLAs) and bookrunners included (in order of commitment size): Société Générale Corporate and Investment Banking (CIB), ING Bank NV, Crédit Agricole CIB, Commerzbank Aktiengesellschaft, The Bank of Tokyo-Mitsubishi UFJ, Credit Suisse, Natixis, OJSC Nordea Bank, The Royal Bank of Scotland NV, and UniCredit. WestLB joined the facility as MLA, and Sumitomo Mitsui Banking Corporation, Bank of America Merrill Lynch (BofA Merrill), Sberbank of Russia and Intesa Sanpaolo Bank Ireland as senior lead arrangers (SLAs). Lead-arrangers are Standard Bank and Morgan Stanley, with JP Morgan as arranger and JSCB Bank of China (Eluosi) joined as lead manager.

Additional details

1. AidData has estimated the all-in interest rate by adding 2.25% to average 6-month LIBOR in April 2011 (0.442%). 2. No detailed information is available about the loan’s 5-year tranche and 7-year tranche, so AidData has estimated a maturity length of 6 years for the time being. 3. The size of Bank of China’s contribution to the syndicate loan is unknown. For the time being, AidData assume equal contributions ($147,619,047) across the 21 known members of the syndicate. 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), (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. Metalloinvest is the largest iron ore and hot briquetted iron (HBI) producer in Europe and CIS and the owner of one of the largest iron ore reserves in the world. Metalloinvest has significant iron ore production facilities in Russia in its mining and processing plants at Lebedinsky (Lebedinsky GOK) and Mikhailovsky (Mikhailovsky GOK). The company's steel mills include the Oskol Elektrometallurgical Plant (OEMK) and Ural Steel, and a ferrous scrap unit, Ural Scrap Company.

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