Bank of China contributes $220 million USD to the $400 million USD term loan tranche of a $1.9033 billion USD syndicated loan for the 1204 MW Rabigh Independent Power Plant (IPP) Project

Project narrative

On July 22, 2009, financial close was reached on a deal in which a syndicate of 10 banks — including the Shandong Branch of the Bank of China (BOC) — entered into a $1.9033 billion USD syndicated loan agreement with Rabigh Electricity Company (RABEC) — a special purpose vehicle joint venture of Rabigh Project Company (a subsidiary of ACWA Power Projects) (40% equity stake), and KEPCO Netherlands B.V. (a subsidiary of Korean Electric Power Company (KEPCO) HoldCo) (40% equity stake), and Saudi Electricity Company (SEC) (20% equity stake) — for the 1204 MW Rabigh Independent Power Plant (IPP) Project. This loan was divided into two tranches: a $1.5033 billion USD term loan tranche denominated in Saudi riyal with a maturity period of 20 years and a $400.0 million USD term loan tranche denominated in U.S. dollars with a maturity period of 20 years, a final maturity date of April 1, 2029, an interest rate during construction of LIBOR plus 300 basis point (bps), changing to LIBOR plus 275 bps after construction. Korea Export Insurance Corporation (KEIC) (now known as K-Sure) provided coverage (guarantee) for the $400 million USD tranche. On July 28, 2009, RABEC entered into a common terms agreement (CTA) with the various financial institutions, as amended on August 11, 2009 and pursuant to an amendment deed dated July 22, 2016, and related financing documents to provide a framework to govern the various facilities RABEC had entered into to finance the Rabigh IPP. The CTA was governed by the laws of England and Wales. The finance documents included standard representations and covenants, the making of distributions, hedging requirements, and required project revenues to be paid into specified project accounts secured in favor of RABEC’s financiers. The obligations of RABEC under the CTA were secured by (i.e. collateralized against) amongst other things, certain project accounts, plant and equipment, intellectual property, insurance proceeds, and shares in RABEC. The financiers were entitled to enforce their security if there is an event of default under the financing documents which is continuing. BOC contributed $220.0 million USD to the $400 million USD term loan tranche. In addition to BOC, the following lenders contributed the respective amounts to the term loan: Standard Chartered Bank PLC ($70.0 million USD), HSBC Bank PLC ($70.0 million USD), and Calyon ($40.0 million USD). The $400 million USD term loan was initially a $500 million USD term loan loan. BOC originally committed $300 million USD, while HSBC and Standard Chartered each originally committed $75 million USD and Calyon originally committed $40 million USD (Calyon's commitment did not change). BOC did not contribute to the $1.5033 billion USD term loan tranche. The following lenders contributed to the term loan: Al Rajhi Bank ($250.02 million USD), Alinma Bank SJSC ($500.03 million USD), Banque Saudi Fransi (BSF) ($142.14 million USD), Saudi Arab British Bank (SABB) ($177.61 million USD), Saudi National Commercial Bank (NCB) ($332.16 million USD), and Samba Financial Group ($101.34 million USD) In addition to the $1.9033 billion USD debt, the project was financed by $600.0 million USD in equity, with KEPCO and ACWA Power each providing $240.0 million USD and SEC providing $120.0 million USD in equity. The project had a total cost of SAR 9.398 billion. The debt-to-equity ratio was 74:26. The proceeds of this loan were to be used by the borrower to finance the construction of the Rabigh Independent Power Project, a 1,204 MW heavy-oil-fired power plant located Rabigh, approximately 130 kilometers north of Jeddah on the west coast of Saudi Arabia, located adjacent to the Rabigh I Power Plant Plant. The plant used heavy fuel oil fuel, provided by Saudi Aramco under a tolling arrangement with SEC, as fuel. The Rabigh IPP was the first independent electricity project developed in Saudi Arabia. It was also the first IPP in the countries of the Gulf Cooperation Council (GCC) to not receive a government guarantee RABEC signed a 20-year Power Purchase Agreement (PPA) with SEC for the power plant on a build-own-operate (BOO) basis on July 11, 2009; the PPA was amended on August 11, 2009 and November 3, 2014. On July 9, 2009, RABEC entered into a turnkey engineering, procurement, and construction (EPC) contract with SEPCO III Electric Power Construction Corporation and Dongfang Electric Corporation Limited for project implementation. On July 11, 2009, RABEC entered into an operations and maintenance (O&M) services contract with Rabigh Operation Maintenance Company — a joint venture between NOMAC (60% equity stake) and Korea Western Power CO., Ltd. (KOWEPO) — for the provision of 20 years of O&M services. The project’s commercial operation date (COD) was achieved on April 10, 2013. As of June 1, 2021, the Rabigh IPP had a remaining asset life of 11.85 years. On June 30, 2016, financial close was reached on a deal in which a syndicate of 14 lenders entered into a 16-year $1.82731 billion USD syndicated loan agreement. The proceeds of this loan were used by the borrower to refinance the existing debt of Rabigh IPP, including the $1.9033 billion syndicated loan. The refinancing aligned the debt with the expiration date of the PPA.