Bank of China and ICBC contribute to $1 billion syndicated loan — via PxF facility — to KAZ Minerals Finance PLC for general corporate and trade financing purposes in January 2020

On January 28, 2020, KAZ Minerals Finance plc — a special purpose vehicle and wholly-owned subsidiary of KAZ Minerals plc — signed a $1 billion syndicated pre-export finance (PxF) facility agreement with a group of Chinese and non-Chinese banks for general corporate and trade financing purposes. The Mandated Lead Arrangers were Deutsche Bank AG, ING Bank NV, Société Générale, ABN AMRO Bank NV, Bank of China Limited, Crédit Agricole Corporate and Investment Bank, Credit Suisse AG, ICBC London, Natixis and PJSC «SOVCOMBANK». Other lenders included Bank of Montreal, DZ Bank AG, Intesa SanPaolo S.P.A., Mizuho Bank, Sumitomo Mitsui Banking Corporation, HSBC Bank PLC, KFW Ipex-Bank GMBH, Raiffeisen Bank International AG and Citibank N.A. The borrowing terms of the loan were as follows: a 4-year maturity (final maturity date: December 2024), a 1-year grace period, and an annual interest rate of LIBOR plus a margin of 2.25% to 3.5% (dependent on the ratio of net debt to EBITDA which was to be tested semi-annually). The loan also included two annual extension options which, if exercised, would extend final maturity of the facility to December 2025 or December 2026, respectively. KAZ Minerals PLC, Vostoktsvetmet LLC and KAZ Minerals Sales Limited served as guarantors of the loan. Monthly repayments commenced in January 2021, with a final balloon repayment of one-third of the facility amount ($333 million) due in December 2024, which are to be amortized during 2025 and 2026 if the extension options are exercised. As of December 31, 2020, $1.0 billion was drawn under the PXF facility.

Additional details

1. 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), 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. 2. The sizes of the individual contributions of Bank of China and ICBC to the lending syndicate are unknown. For the time being, AidData assumes equal contributions across all 19 known members of the syndicate ($52,631,578). 3. AidData has estimated the all-in interest rate by adding 2.875% (the midpoint of the 2.25% to 3.5% range) to average 6-month LIBOR in January 2020 (1.839%). 4. KAZ Minerals plc is a British copper company focused on large scale, low cost open pit mining in Kazakhstan. The Group is listed in London and Kazakhstan stock exchanges. 5. The bank account pledge agreement can be accessed in its entirety via https://www.dropbox.com/s/s5thw6509yke9ln/Bank%20Account%20Pledge%20Agreement%20for%202020%20Kaz%20Minerals%20PxF%20Facility.pdf?dl=0. 6. The trader assignment agreement can be accessed in its entirety via https://www.dropbox.com/s/sesb1s8j4myi6fc/Trader%20Assignment%20Agreement%20for%202020%20Kaz%20Minerals%20PxF%20Facility.pdf?dl=0. 7. The legal support under the transaction was provided by Hogan Lovells and Linklaters. 8. Several sources refer to the 2020 PxF facility as a refinancing or extension of similar PxF facilities that the borrower secured in December 2012 and June 2017.

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