BOCHK contributes to €180 million EUR Class B tranche of a €980 million EUR syndicated loan to Ctrip.com International for the acquisition of Skyscanner (Linked to Record ID#99023)

Project narrative

On June 8, 2017, a syndicate of nine banks — the Shanghai Changning Sub-branch of the Bank of China (BOC), the Shanghai Branch of the Industrial and Commercial Bank of China (ICBC), the Shanghai Branch of Shanghai Pudong Development Bank (SPDB), the Shanghai Xujiahui Sub-branch of China Merchants Bank, the Shanghai Branch of China Minsheng Bank, the Shanghai Branch of the Export-Import Bank of China, the Shanghai Changning Sub-branch of Bank of Communications (BoComm), Bank of China (Hong Kong) Limited (BOCHK), and the London Branch of the Bank of Communications — signed a €980 million EUR term loan agreement with Ctrip.com International Limited — a Cayman Islands—incorporated Chinese online travel agency company — for the acquisition of Scotland-based metasearch engine and travel agency Skyscanner Holdings Limited. This loan carried a maturity period of five years from the first drawdown date, a drawdown term of 90 days from the signing of the agreement (September 6, 2017) or a longer period agreed by Ctrip.com International and the Shanghai Branch of BOC, and a grace period of six months from the first drawdown (0.5 years), a repayment schedule consisting of 10 installments every six months beginning six months after the first drawdown date (1.5% of due at first repayment, 3.0% at second, 13.5% at third, 24.0% at fourth, 50.0% at fifth, 65.0% at sixth, 75.0% at seventh, 85.0% at eighth, 92.5% at ninth, and 100.0% at tenth). The borrower had the option to repay all or portion of the loan in advance of the early repayment dats, beginning from the third anniversary of the loan (June 8, 2020). This loan was divided into a Class A loan with a face value in RMB equivalent to €800 million EUR and an interest rate based on the People’s Bank of China (PBOC) benchmark interest rate and a Class B loan with a face value of €180 million EUR with an interest rate of EURIBOR plus a margin of 150 basis points (bps) per annum, with a provision that if the EURIBOR was negative, it would be counted as 0 for the calculation of the interest rate). This loan was secured by (i.e. collateralized against) a pledge of all shares of Skyscanner Holdings Limited held by Ctrip.com International, a mortgage of two properties located in Shanghai, China, a pledge of financial products held by Ctrip.com and its group companies, and other security interests. Shanghai Huacheng Southwest International Travel Agency Co., Ltd. served as the joint and several liability guarantor for the loan. The loan was governed by the laws of the People's Republic of China. If Ctrip.com International could be forced into mandatory early repayment if it or Skyscanner obtained additional capital through debt financing from other lenders, there was an initial public offering (IPO) of Skyscanner or proceeds from the transfer of the shares of Skyscanner or other companies, with such capital being mandated to repay the loan. If the two mortgaged properties decreased in valuation, the Shanghai Branch of BOC would require Ctrip.com International to provide additional security. If Ctrip.com International conducted under any financing documents any illegal activities according to applicable laws, it was required to notify the Shanghai Branch of BOC and repay the total outstanding amount immediately. The loan had the following financial covenants: Ctrip.com International was required to maintain the consolidated debt-to-asset ratio at a level no greater than 80%, maintain the consolidated total assets at a level no less than RMB 100 billion, maintain the consolidated net interest-bearing liabilities to an EBITDA ratio at a level no greater than 5.0:1.0, and maintain the interest coverage ratio at a level no less than 2.0:1.0; Skyscanner was required to maintain its consolidated total assets at a level no less than £100 million GBP and maintain its consolidated net interest-bearing liabilities to EBITDA ratio at a level no greater than 5.0:1.0; and Shanghai Huacheng Southwest International Travel Agency Co., Ltd. was required to maintain its consolidated total assets at a level no less than RMB 5 billion. The loan required Ctrip.com International to remain the controlling shareholder of Skyscanner, Ctrip Travel Information Technology (Shanghai) Co., Ltd., Ctrip Travel Network Technology (Shanghai) Co., Ltd. and Ctrip.com Hong Kong Limited, unless approved by BOC Shanghai Branch in advance and in control of Shanghai Huacheng Southwest International Travel Agency Co., Ltd. The loan required Ctrip.com International to remain as a public company listed on Nasdaq. The loan forbid the borrower from entering into any transactions other than ordinary of business to transfer its assets, business, or revenues if such transactions would result in a 10% decrease in its consolidated total assets. The loan forbid the borrower from entering into any merger, consolidation, or reorganization unless those transactions would not result in a change of the controlling shareholder of Ctrip.com International and would not have a material adverse effect. The loan forbid the borrower from materially changing the nature of its business operation. The loan required that the borrower maintain a holding of at least 97% of shares of Skyscanner before the principal, the interest, and other fees under the loan were fully paid. The loan forbid the borrower from amending its memorandum or articles of associations in a such a way that would have a material adverse effect on the lenders unless approved by BOC Shanghai Branch before the principal, the interest and other fees under the loan were fully paid. The following seven lenders contributed to the €800 million EUR-equivalent Class A loan as onshore lenders: the Shanghai Changning Sub-branch of BOC, the Shanghai Branch of ICBC, the Shanghai Branch of SPDB, the Shanghai Xujiahui Sub-branch of China Merchants Bank, the Shanghai Branch of China Minsheng Bank, the Shanghai Branch of China Eximbank, and the Shanghai Changning Sub-branch of BoComm. Record ID#99024 captures BOC Shanghai Changning Sub-branch's contribution. Record ID#99025 captures ICBC Shanghai Branch's contribution. Record ID#99026 captures SPDB Shanghai Branch's contribution. Record ID#99027 captures China Merchants Bank Shanghai Xujiahui Sub-branch's contribution. Record ID#99028 captures China Eximbank Shanghai Branch's contribution. Record ID#99029 captures BoComm Shanghai Changning Sub-branch's contribution. The following two lenders contributed to the €180 million EUR Class B loan as onshore lenders: BOCHK and the London Branch of BoComm. Record ID#99014 captures BOCHK's contribution. Record ID#99023 captures BoComm London Branch's contribution. BOC served as sole mandated lead arranger and syndicated the loan to the other lenders. ICBC Shanghai Branch and SPDB Shanghai Branch served as joint lead arrangers. BOC Shanghai Branch served as as agent. BOC Shanghai Changning Sub-branch served as guarantee agent. The proceeds of the loan were to be used to support Ctrip.com International's £1.4 billion GBP ($1.74 billion USD) acquisition of travel search site Skyscanner. On November 23, 2016, Ctrip.com International announced the signing of an agreement with the majority shareholders of Skyscanner Holdings Limited to acquire all their shares, as well as offer to acquire shares from the remaining shareholders, for approximately £1.4 billion GBP, with the acquisition to be financed with cash, Ctrip.com International shares, and debt. The transaction was expected to close by the end of 2016. The acquisition was completed in December 2016.