China Construction Bank contributes to $400 million syndicated pre-export finance (PXF) facility with NLMK for general corporate and debt refinancing purposes (Linked to project ID#95885)

In November 2015, a syndicate of 10 banks — including China Construction Bank Corporation (CCB) and the Industrial and Commercial Bank of China (ICBC) — signed a $400 million USD syndicated re-export finance (PXF) facility agreement with OJSC Novolipetsk Steel (OJSC NLMK) — a Russian steelmaking company — for general corporate and debt refinancing purposes. This loan carried a maturity period of four years and an interest rate of LIBOR plus a margin of 3%. The proceeds of this loan were to be used by the borrower for the refinancing of its short-term debt and for general corporate purposes. In addition to CCB and ICBC, the following lenders contributed to the loan syndicate: Société Générale S.A. (SocGen), ING Bank N.V., Nordea Bank AB, PJSC ROSBANK, Deutsche Bank AG, Natixis, Bank of America Merrill Lynch (BAML), and UniCredit Bank Austria AG. SocGen served as the appointed coordinator, mandated lead arranger, and bookrunner. ING, Nordea, ROSBANK, and UniCredit served as mandated lead arrangers and bookrunners. Deutsche Bank, Natixis, and BAML served as lead arrangers. CCB and ICBC served as arrangers. Deutsche Bank served as facility agent. ING served as security agent.

Additional details

1. OJSC NLMK is a global steel producer headquartered in Lipetsk, Russia. 2. The individual contribution of the 10 lenders to this $400 million USD syndicated loan is unknown. For the time being, AidData has estimated the contribution of ICBC by assuming that each lender contributed an equal amount ($40,000,000 USD) to the syndicated loan. 3. Debevoise & Plimpton LLP served as a legal adviser for the transaction. 4. AidData has coded this transaction as a collateralized loan because ING Bank N.V. acted as the security agent (i.e. collateral agent) for the loan. When lenders take collateral as security for their loans, a collateral agent/security agent is often appointed to enforce rights against the collateral in the event of the borrower's default under the loan. 5. A pre-export finance (PXF) facility is an arrangement in which a commodity 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. 6. A 6-month LIBOR was assumed. The average 6-month LIBOR for November 2015 was 0.485%. Therefore, the interest rate has been coded as 0.485% plus 3%, or 3.485%.

Number of official sources

2

Number of total sources

4