Narrative
Full Description
Project narrative
On April 30, 2018, a two-bank syndicate — China Construction Bank (New Zealand) Limited (CCB NZ) and Westpac New Zealand Limited (WNZL) entered into two revolving advance facility agreements, totaling $100 million NZD with Lyttelton Port Company Limited (LPC) — the operator of the Port of Lyttelton and wholly owned subsidiary of Christchurch City Holdings Limited (CCHL), an wholly-owned investment arm of the Christchurch City Council (CCC) — for unspecified purposes. One facility carried a maturity period of three years from commencement and the other carried a maturity period of five years from five years. The interest rates were based on the bank bill bid settlement (BKBM) rate plus a margin ranging from 0.72% to 0.96% per annum. These facilities were unsecured, although featured a negative pledge arrangement including certain certificates and covenants, such as a minimum interest cover equipment (2.25 times EBITDA), a maximum gearing ratio percentage requirement (45%), and a coverage ratio. As of June 30, 2018, LPC had not drawn on either facility. The loans were partially drawn down in 2019, with LPC generally borrowing them on 90-day terms. By June 30, 2020, one of the WNZL facilities was repaid or cancelled, leaving two facilities from CCB NZ and one remaining WNZL facility. As of June 30, 2021, the two CCB facilities were worth $80.5 million NZD and the WNZL loan was worth $84.5 million NZD. As June 30, 2022, the two CCB facilities were worth $70 million NZD and the WNZL loan was worth $70 million NZD.
Staff comments
1. Some LPC company reports, "Lyttelton Port Company Annual Report 2019" pg.78 for example, state there was a "Guaranteeing Group" for the loans from CCB NZ and WNZL, suggesting that an entity issued a guarantee for these facilities. This issue merits further investigation. 2. AidData assumes that "Lyttelton Port Company Annual Report 2018"'s description of two facilities worth $100 million NZD signed by CCB NZ and WNZL with differing maturities are the two bank loan facilities for WNZL and two bank loan facilities CCB NZ described in "Lyttelton Port Company Annual Report 2019" (each bank loan facility representing a tranche of the two loans referred to in the 2018 report). In "Lyttelton Port Company Annual Report 2020", there is said to be one WNZL bank loan facility, but still two CCB NZ bank loan facilities. Then, in "Lyttelton Port Company Annual Report 2021", the face value of the facilities are directly stated: the two CCB facilities were worth $80.5 million NZD and the WNZL loan was worth $84.5 million NZD. "Lyttelton Port Company Annual Report 2021", the CCB NZ facilities' face value was now $70 million NZD, as was the WNZL loan. Considering the initial $100 million NZD size of the two facilities and that the stated face values are $65 million NZD larger than it, it is likely LPC's loan facilities were amended by fiscal year 2021. However, it is entirely unclear if this represented an up-sizing of the $100 million NZD loan or a refinancing of that loan. To avoid double counting (as if it was an up-sizing and not refinancing, AidData would overestimate CCB NZ's contribution by some $49.5 million NZD), AidData has coded $80.5 million NZD as the transaction amount for this record. 3. As the breakdown of the financing between the three-year and five-year maturity tranches is unclear, AidData has taken the average of the maturities (3 + 5) / 2 = 4 and coded it as the maturity period for this record. This issue merits further investigation. 4. A 3-month BKBM was assumed. The average 3-month BKBM for April 2018 was 2.01% (calculated from the list of March 2020 rates published by the Reserve Bank of New Zealand, available here: https://www.rbnz.govt.nz/statistics/series/exchange-and-interest-rates/wholesale-interest-rates). Therefore, the interest rate has been coded as 0.692% plus 0.72% (as the margin ranged between 0.72% to 0.96%, 0.72% represents the minimum value for the margin), or 2.73%.