China Construction Bank participates in $800 million syndicated pre-export finance (PxF) facility with Metalloinvest for debt refinancing purposes in May 2017

On May 5, 2017, Metalloinvest JSC signed a $1.05 billion syndicated pre-export finance (PxF) facility agreement with 17 financial institutions from Europe, USA, China, Japan, and Russia. China Construction Bank participated in the PxF facility (loan) syndicate as a mandated lead arranger. The loan includes two tranches: a $800 million tranche that carries a 5-year maturity and a 2-year grace period (repayable in 2020–2022), and a $250 million tranche that carries a 7-year maturity and a 4-year grace period (repayable in 2022–2024). Both tranches carried floating interest rates linked to 1-month LIBOR. The borrower was expected to use the proceeds of the loan to refinance existing pre-export finance facilities on improved terms and extend their maturities.

Additional details

1. The size of the contribution from China Construction Bank to the $800 million syndicated loan tranche unknown. For the time being, AidData assumes equal contributions ($47,058,823) across the 17 members of the syndicate. 2. 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. 3. Metalloinvest JSC 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 JSC 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.

Number of official sources

3

Number of total sources

7