ICBC Yangon Branch contributes to $2 million syndicated loan tranche for Golden City Project (Linked to Project ID#96663 and #96665)

On June 8, 2020, ICBC Yangon Branch participated in a multi-currency syndicated loan agreement with Golden Land Real Estate Development Co. Ltd. (GLRE) -- a special purpose vehicle (SPV) that is legally incorporated in Myanmar and 49% owned by Emerging Towns & Cities Singapore Ltd. -- for the Golden City Project. The loan consisted of three tranches: a $45,000,000 tranche (as captured via Project ID#96663), a $2,000,000 tranche (as captured via Project ID#96664), and an MMK 4,500,000,000 (as captured via Project ID#96665). Participants in the loan syndicate included the Industrial and Commercial Bank of China Limited (Yangon Branch) (“ICBC”), E.SUN Commercial Bank, Ltd (Yangon Branch) (“Esun”) and Kanbawza Bank (Yangon) (“KBZ”). The proceeds of the multi-currency loan were to be used by the borrower to support the Golden City Project, which is a luxury mixed-use development with an estimated gross floor area of approximately 3.6 million square feet in the Yankin township of Yangon, Myanmar. It comprises 40 residential units, 1 retail unit, and 27 office units over a 70-tenure. The address is No. 3, Land Survey Block, Kanbe, Yankin Road, Yankin Township, Yangon, Myanmar. As of December 31, 2021 and December 31, 2020, GLRE had utilized a total of $47,000,000 under the syndicated facility. The proceeds of the syndicated facility were to be used to finance GLRE’s operational needs and to refinance its loans. The interest rate was based on the six-month USD LIBOR (London Interbank offered rate) plus a margin equal to 100 basis points for the 2 tranches in USD and the CBM (Central Bank of Myanmar) Reference Rate plus a margin equal to 100 basis points for the tranche in MMK. Regarding the USD loan utilized, GLRE was responsible for making equal principal repayments of $2,350,000 every three months for five years from the first utilization date (June 8, 2020). The syndicated facility was secured by (i.e. collateralized against): 1. charges over certain of the Group’s property, plant, and equipment with a total carrying amount of $1,517,000 (2020: $1,502,000) as of December 31, 2021; 2. charges over shares in the Company’s subsidiaries; 3. charges over certain of the Group’s investment properties and development properties with carrying amount of $74,741,000 (2020: $78,966,000) and $50,937,000 (2020: $51,252,000), respectively, as of December 31, 2021; 4. charges over certain of the Group’s cash and bank balances of $1,173,000 (2020: $713,000) (Note 9); 5. charges over certain of the Group’s trade receivables of $192,000 (2020: $nil); and 6. corporate guarantees by the Company. There are indications that the loan that was issued for the Golden City Project has financially underperformed vis-a-vis the original expectations of the lenders. GLRE made a partial principal repayment of $1,000,000 for March 2021 and negotiated temporary relief through the revision of the repayment schedule. The next principal repayment of $4,130,000 was scheduled on March 8, 2023, to be made every three months until June 8, 2025. Under the terms of the syndicated facility, GLRE was required to comply with certain financial covenants for the duration of the loan. During the financial year, GLRE did not consistently meet a financial covenant, requiring that the total borrowings of GLRE not exceed five times its earnings before interest, tax, depreciation, and amortization at any time. In addition, GLRE did not make payment for a facility fee that was due. Consequently, the loan amounting to $55,173,000 (2020: $54,138,000) became repayable on demand and was classified as current as of December 31, 2021.

Additional details

1. The precise size of the contribution of ICBC to the loan syndicate is unknown. For the time being, AidData assumes equal contributions to the $2 million loan ($666,667) across the 3 known participants in the loan syndicate 2. The interest rate that applies to this loan (1.69%) was calculated by taking the average 6-month LIBOR rate in 2020 (0.69%) — the year when the loan agreement was finalized — and adding a 1% margin.

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