Narrative
Full Description
Project narrative
In June 2017, KAZ Minerals Finance plc — a special purpose vehicle and wholly-owned subsidiary of KAZ Minerals plc — signed a $600 million syndicated pre-export finance (PxF) facility agreement with a group of Chinese and non-Chinese banks for general corporate purposes. Participants in the loan syndicate included Deutsche Bank, ING, Société Générale, Bank of China (captured in Record ID#96289), Citibank, CA-CIB, JP Morgan, Natixis, ABN Amro, ICBC (captured in Record ID#96290 ), Rabobank and Unicredit. The borrowing terms of the loan were as follows: a 3-year maturity (final maturity date: June 2021), a 1-year grace period, and an annual interest rate of LIBOR plus a margin of 3% to 4.5% (dependent on the ratio of net debt to EBITDA which was to be tested semi-annually). Principal repayments were scheduled to commence in July 2018 and continue in equal monthly installments over a three-year period until final maturity in June 2021. The loan was fully drawn (disbursed) as of December 31, 2017. During 2018, $100 million of the borrowing was repaid, with $200 million was due to be paid in 2019. KAZ Minerals PLC, Vostoktsvetmet LLC and KAZ Minerals Sales Limited served as guarantors of the facility.
Staff comments
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 12 known members of the syndicate ($50 million). 3. AidData has estimated the all-in interest rate by adding 3.75% (the midpoint of the 3% to 4.5% range) to average 6-month LIBOR in June 2017 (1.432%). 3. 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. 4. The bank account pledge agreement can be accessed in its entirety via https://www.dropbox.com/s/5lci0szvf7umu5r/Bank%20Account%20Pledge%20Agreement%20for%202017%20Kaz%20Mineral%20PXF%20Facility.pdf?dl=0. 5. The trader assignment agreement can be accessed in its entirety via https://www.dropbox.com/s/rvcwyjwx08etjdd/Trader%20Assisgnment%20Agreement%20for%202017%20Kaz%20Mineral%20PxF%20Facility%20Agreement.pdf?dl=0. 6. The agent for the transaction was Deutsche Bank AG and the security trustee was ING Bank. 8. Several sources refer to the 2017 PxF facility as a refinancing or extension of a similar PxF facility that the borrower secured in December 2012.