Bank of China provides a $500 million AUD loan to Cheung Kong Infrastructure to support the acquisition of a 100% equity stake in DUET Group

Project narrative

In December 2016, Hong Kong-listed and Bermuda-incorporated infrastructure company Cheung Kong Infrastructure Holdings Limited (CKI) made a $7.3 billion AUD bid to acquire Australian infrastructure owner DUET Group, offering $3 AUD per share and valuing the company at $7.5 billion AUD. Then, on January 14, 2017, CKI, CK Asset Holdings Limited (CKA) (a Cayman-Island incorporated associate of CKI and also known as Cheung Kong Property Holdings Limited), and Power Assets Holdings Limited (PAH) (a Hong-Kong incorporated company which CKI owns a 38.01% stake of) entered into a consortium formation agreement to become indirect owners of CK William UK Holdings Limited — a special purpose (SPV) jointly owned by CKI (40% interest), CKA (40% interest), and PAH (20%) — and fund CK William UK Holdings and its subsidiaries' proposed acquisition of all of the stapled securities in issue of the DUET Group by way of schemes of arrangement and a trust scheme and enter into a shareholders’ agreement to govern the shareholder relationship in the SPV as well as the downstream business of DUET. Furthermore, on January 14, 2017, CKI, CKA, PAH, and CK William Australia Bidco Pty Ltd — a special purpose (SPV) — entered into a scheme implementation agreement with DUET for the acquisition of 100% of the Australian Securities Exchange (ASX)-listed company for approximately $7.4 billion AUD ($5.5 billion USD; $42.4 billion HKD). To support the acquisition of DUET Group, in 2017 Bank of China (Hong Kong) Limited (BOCHK) entered into an approximately $500,000,000 AUD bilateral facility (loan) agreement with CKI. CKI also entered into a $750,000,000 AUD club facility with Sumitomo Mitsui Banking Corporation (SMBC), The Hongkong and Shanghai Banking Corporation Limited (HSBC), the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Mizuho Bank, and the Canadian Imperial Bank of Commerce (CIBC) and a $300,000,000 AUD club facility with Hang Seng Bank, Limited and BTMU. Including the BOCHK loan, CKI entered into a total of $1,550,000,000 AUD in facility agreements to support the acquisition. CKI also used its existing cash reserves. For their respective contributions, CKA and PAH utilized existing cash reserves. On March 14, 2017, the independent shareholders; approval was obtained for the consortium. In April 2017, DUET Group's shareholders, the Supreme Court of New South Wales, and Australia's Foreign Investment Review Board (FIRB) issued approval. Furthermore, In April 2017, Federal Treasurer Scott Morrison announced that the Federal Government of Australia would not oppose the transaction. This was particularly significant because the Australian Government under Morrison had blocked CKI from acquiring a stake in New South Wales electricity distribution Ausgrid in August 2016 because of "national security concerns"; nonetheless, the Australian Government approved this acquisition despite the inclusion of crucial infrastructure assets. The acquisition received financial close on May 15, 2017. The DUET Group was an ASX-listed is an owner and operator of significant energy utility assets in Australia, the United States, the United Kingdom, and Greece. It consisted of four separate legal entities traded together on the ASX: DUET Finance Trust, DUET Finance Limited, DUET Company Limited, and DUET Investment Holdings Limited. In Australia, DUET held the following assets: a 100% ownership stake in Multinet Group Holdings Pty Limited (Multinet Gas), a gas distribution business located in Victoria that operates a regulated network covering 1,860 square kilometers of the east and southeast suburbs of Melbourne, the Yarra Ranges and South Gippsland and 692,000 customers; a 66% ownership stake in United Energy Distribution Holdings Pty Limited, an electricity distribution business in Victoria with distribution network covering 1,472 square kilometers of southeast Melbourne and the Mornington Peninsula and 665,000 customers (25% of Victoria's population) with the remaining 34% stake owned by a joint venture between Singapore Power Limited and Chinese state-owned enterprise State Grid Corporation of China; a 100% ownership stake in Energy Developments Pty Limited (EDL), a Brisbane-based international provider of clean low greenhouse gas emissions energy and remote energy and manager of a portfolio of 900 MW of power generation facilities in Australia, Europe, and the United States; an 100% ownership stake in the 1,539 kilometer-long Dampier to Bunbury Natural Gas Pipeline, Western Australia’s principal gas transmission pipeline and the only pipeline connecting the natural gas reserves of the Carnarvon and Browse basin on Western Australia’s North West Shelf to Perth; and a 100% ownership stake in DBP Development Group, a company that builds, owns, and operates unregulated gas pipelines; DBP's assets include a 100% ownership stake in the Wheatstone Ashburton West Pipeline in Western Australia, a 57% ownership stake in the Fortescue River Gas Pipeline in Western Australia, a 100% ownership stake in the Ashburton Onslow Gas Pipeline in Western Australia, and the under-development Tubridgi Gas Storage Facility near Onslow, Western Australia.