Bank of China contributes to €1.75 billion EUR syndicated revolving credit facility for Carlsberg Breweries for general corporate purposes and refinancing debt used for the acquisition of Scottish & Newcastle plc (Linked to Record ID#101651)

Project narrative

On January 25, 2008, Carlsberg A/S (a Danish multinational brewing company) and Heineken N.V. (a Dutch multinational brewing company) entered into an agreement to jointly purchase Scottish & Newcastle plc (S&N) — an Edinburgh, Scotland-headquartered brewing company listed on the London Stock Exchange that was the United Kingdom's largest brewer and the world's sixth-largest beermaker at the time, brewer of Foster's, Kronenbourg, and Newcastle Brown Ale. — for £7.8 billion GBP ($15.3 billion USD), or £8 GBP per share, with Carlsberg taking 54% of the costs and Heineken 46%. Under the acquisition, S&N would be split, with Carlsberg acquiring S&N's 50% stake in Baltic Beverages Holding (BBH) — a Russia-based joint venture that Carlsberg owned the other 50% stake of and owns Baltika Brewery — giving it full control over BBH and S&N's businesses in France, Greece, China, and Vietnam. Heineken would acquire S&N's British business including Strongbow cider and John Smith's beer, its operations in Belgium, Portugal, and Ireland, and its United States and India businesses. Carlsberg planned to fund ~55% of its share via a kr.31 billion DKK equity bridge loan to be repaid via a rights issue and the remaining ~45% via debt, while Heineken planned to finance its share exclusively by debt. In October 2007, Carlsberg mandated BNP Paribas S.A., Danske Bank A/S, Lehman Brothers, and Nordea Bank as bookrunners to arrange debt for the acquisition. On February 11, 2008, the bookrunners launched syndication on a £2.772 billion GBP syndicated loan to Carlsberg for the acquisition. Lenders were invited to contribute either £115 million GBP or £185 million GBP to the syndicate. Then in March 2008, financial close was reached on syndication; a syndicate of 25 banks — including the Bank of China (UK) Limited (BOC UK) — entered into a £2.772 billion GBP syndicated loan agreement with Carlsberg in support of its purchase of the S&N assets. This loan was divided into four tranches: a £1.027 billion GBP term loan tranche with a maturity period of three years and an interest rate based on a floating rate plus a margin of 80 basis points (bps); a £770 million GBP term loan tranche with a maturity period of five years and an interest rate based on a floating rate plus a margin of 90 bps; a £770 million GBP five-year revolving credit facility (RCF) tranche with a maturity period of five years and an interest rate based on a floating rate plus a margin of 85 bps; and a £205 million GBP term loan tranche with a maturity period of one year and a two-year extension option. The £205 million GBP tranche was not syndicated, while the other three tranches were. The interest rate margin of the three syndicated tranches featured a leverage grid that would begin after 12 months, with a margin on 125 bps on all tranches if the borrower's net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio was greater than four; a margin of 65 bps, 75 bps, and 70 bps respectively for a leverage ratio of between 3.5 and four times; a margin of 55 bps, 65 bps, and 60 bps for a leverage ratio between three and 3.5 times; a margin of 45 bps, 55 bps, and 50bps for a ratio between 2.5 and three times; and 35 bps, 45 bps, and 40 bps for a leverage ratio of less than 2.5. BOC provided £118 million GBP as a mandated lead arranger in syndication as captured by Record ID#101651. The acquisition was expected to be completed in the second quarter of 2008 after approval of the European Commission and other authorities. The acquisition was completed on April 29, 2008. On October 1, 2010, a syndicate of 21 banks — including the Bank of China (BOC) — entered into €1.75 billion EUR syndicated multi-currency revolving credit facility (RCF) agreement with Carlsberg Breweries A/S for refinancing and general corporate purposes. This loan carried a maturity period of five years and an interest rate based on a floating rate plus a margin of 90 bps and had no utilization fee. The proceeds were to be used by the borrower for general corporate purposes as well as the partial refinancing and cancellation of the £5.8 billion GBP S&N acquisition facilities originally accrued in October 2007, including the £2.772 billion BGP syndicated loan. Record ID#99319 captures BOC's contribution. A total of 21 banks participated in the credit facility. Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), BNP Paribas, Credit Agricole Corporate & Investment Banking (CACIB), Danske Bank, Deutsche Bank AG (London Branch), Nomura International, Nordea, Rabobank International (London Branch), the Royal Bank of Scotland PLC (RBS), SEB, and Société Générale S.A. (SocGen) joined the syndicate as mandated lead arrangers and bookrunners (12 in total). BOC, CIC (London Branch), Citibank, DNB Nor Bank ASA, Intesa Sanpaolo S.P.A, KfW IPEX-Bank GmbH, Svenska Handelsbanken, Swedbank AB, and Unicredit Bank Austria AG joined as arrangers (nine in total). The facility was self arranged by Carlsberg while Danske Bank served as an agent. The initial size of this facility was €1.5 billion EUR but was raised to €1.75 billion EUR after significant oversubscription.