Narrative
Full Description
Project narrative
On December 20, 2012, Kazakhmys Finance — 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 purposes, including to provide liquidity during the development of copper projects at Bozshakol and Aktogay. The borrowing terms of the loan were as follows: a 5-year maturity, a 2-year grace period, and an annual interest rate of LIBOR plus a 2.8% margin. The loan (facility) had a final maturity date of December 2017 and monthly loan repayments of principal were scheduled to commence in January 2015. KAZ Minerals PLC, Vostoktsvetmet LLC and KAZ Minerals Sales Limited served as guarantors of the loan. Participants in the 2012 loan syndicate included Bank of China, Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank AG, ICBC (London) PLC, ICBC (Almaty) JSC, ING Bank, Natixis, Société Générale, Sumitomo Mitsui Banking Corporation and UniCredit as the Mandated Lead Arrangers and Bank of America Merrill Lynch, Citibank, Crédit Agricole CIB, JP Morgan and The Royal Bank of Scotland as Arrangers. Record ID #96385 captures Bank of China's contribution to this facility. Record IDs #109854 and #109855 capture ICBC London and ICBC Almaty's contributions respectively. On December 27, 2013, the facility was reduced to $500 million, due to Kazakhmys restructuring into KAZ Minerals PLC, and the original facility's disposal provisions that prevented the facility from continuing after the group restructuring. $500 million was chosen, being the amount drawn (disbursed) at the end of the availability period. On October 29, 2014, the KAZ Minerals Finance PLC signed an amendment to its December 20, 2012 PxF facility. The amended facility restated the PXF facility signed in December 2012. At signing, commitments from the syndicate of lending banks totaled $334 million and a net payment of $166 million was paid to exiting banks. On December 5, 2014, the facility was increased to $349 million by means of an accordion feature which allowed existing lenders to increase their commitments, or new lenders to join, until December 31, 2015. Under the facility, principal repayments amortize in equal monthly installments over a three year period between January 31, 2016 and December 31, 2018 (the revised final maturity date). The margin payable on the amended facility was variable, ranging from 3.0% to 4.5% above USD LIBOR, dependent on the ratio of net debt to EBITDA which was to be tested semi-annually. Participants in the 2014 amended facility included Bank of China Limited, Citibank N.A., Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, ICBC (London) PLC, ING Bank N.V., JP Morgan Chase Bank, N.A. and Société Générale. Deutsche Bank AG. Deutsche Bank AG continued as the agent bank and ING Bank served as the security trustee The 2012 PXF facility replaced a prior facility. On February 29, 2008, Kazakhmys Finance and a syndicate of banks had signed a $2.1 billion pre-export facility. The facility was acquired for general corporate purposes, including liquidity during the acquisition of Ekibastuz 2, a 250MW coal-fired power plant and Maikuben West coal mine (see record ID #108641).
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 exact size of the individual contribution of Bank of China to the lending syndicate is unknown. For the time being, AidData assumes Bank of China maintained its original contribution to the 2012 $1 billion PXF facility, which when assuming equal contributions across all 15 members of that syndicate comes to $66,666,666. 3. The margin payable on the amended facility was variable, ranging from 3.0% to 4.5% above USD LIBOR, dependent on the ratio of net debt to EBITDA which was to be tested semi-annually. An average of this margin has been entered for the purposes of this record. In KAZ Minerals' 2015 Annual Report, 3.69% was reported as the average interest rate for the facility during 2015. 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 agent for the transaction was Deutsche Bank AG and the security trustee was ING Bank. 6. The original bank account pledge agreement can be accessed in its entirety via https://www.dropbox.com/s/emfjlvw9dp2tnb3/Bank%20Account%20Pledge%20Agreement%20for%202012%20Kaz%20Minerals%20PxF%20Facility%20Agreement.pdf?dl=0. 7. The original trader assignment agreement can be accessed in its entirety via https://www.dropbox.com/s/0fwapxcvbhfbslv/Trader%20Assignment%20Agreement%20for%202012%20Kaz%20Mineral%20PxF%20Facility%20Agreement.pdf?dl=0.