Bank of China provides $25 million buyer’s credit loan for the 3G and 4G Wireless Project

On November 19, 2014, the Shenzhen Branch of Bank of China and Telesur (Suriname’s state-owned telecommunications company) signed a $25 million term loan facility agreement for the 3G and 4G Wireless Project. The borrowing terms of the loan were as follows: a 7-year maturity, a 2.5-year grace period, an interest rate of 6-month LIBOR plus a 3.5% margin, a 2% default (penalty) interest rate, a 0.8% commitment fee, a 1.2% arrangement (management) fee worth $300,000, and a 5.61% Sinosure insurance fee (premium) worth $1,402,500. The borrower was expected to make ten, equal, semi-annual principal payments (worth $2.5 million each) between May 19, 2017 and November 19, 2021. The loan was repaid in full. The borrower (Telesur) was expected to use the proceeds of the loan to finance 85% of the cost of two commercial (equipment supply and implementation service) contracts that it signed with Huawei International Pte. Ltd. and Huawei Technologies (T&T) Ltd. on September 28, 2012 and September 1, 2014. The borrower was also required to purchase a buyer's credit insurance policy from Sinosure. The purpose of the project was to purchase and install equipment in support of the rollout of a 3G and 4G wireless telecommunications network in Suriname. Huawei International Pte. Ltd. and Huawei Technologies (T&T) Ltd. were the contractors responsible for implementation. Their work was overseen by Telesur. The implementation of the project commenced in 2014 and reached completion in 2016. The user revenues generated by the project were reportedly sufficient to ensure timely repayment of the loan from Bank of China.

Additional details

1. The China-Latin America Commercial Loans Tracker, which is produced by the Inter-American Dialogue, does not capture this loan. 2. Hogan Lovells served as a transaction adviser. 3. A confidential source with direct knowledge of the transaction informed AidData of the loan's commitment date, face value, borrowing terms, credit enhancement arrangement, and repayment. 4. AidData has estimated the all-in interest rate by adding 3.5% to average 6-month LIBOR in November 2014 (0.327%). 5. The Sinosure insurance premium was a flat fee ($1,402,500) based on a percentage (5.61%) of the total loan commitment amount. 6. The equipment supply and implementation service contract identification number of the September 1, 2014 contract is 0007401105250F.

Number of official sources

5

Number of total sources

8