Deals of the Year 2014: Americas Winners

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Santander aircraft financing boosts Aeromexico fleet

Aeromexico – Pre-Delivery Payments Financing

Amount: $108.8 million

MLAs: Banco Santander Mexico

Borrower: Trust constituted under Mexican law

Guarantors: Grupo Aeromexico, Aerovias de Mexico

Tenor: 12 months

Administrative Agent: Banco Santander Mexico

Aeromexico is Mexico’s flagship airline and a leader in the air transportation industry, operating flights to 80 destinations in 20 countries throughout the Americas, Europe and Asia.

One of the airline’s main objectives has been to increase connectivity and secure its position within the Mexican market, where it has 36% market share. In order to do so, fleet renewal is imperative, leading the airline to seek financing for the purchase of two new Boeing 787-8 Dreamliners.

Santander, which acted as mandated lead arranger and administrative agent, was able to provide $66 million of the total pre-delivery payment financing (PDPF), with the remainder coming from an undisclosed participant bank. The tenor of the loan was 12 months, with interest payments made quarterly and the principal due at the delivery of each aircraft. While the aircraft were delivered to Aeromexico the borrower was a trust constituted under Mexican law in order to mitigate clawback risk, in the event the purchaser wishes to retrieve their PDP.

The two aircraft were delivered in December 2014 and January 2015. The PDPF was used by Aeromexico to pay the airline manufacturer, US-headquartered Boeing, during the construction period. The amount of the PDPs represent a large part of the total price of the aircraft (in the region of 30%) and sometimes can include the financing of the engines, built by General Electric, or other general equipment.



Citi and DZ Bank turn to Colombian aircraft deal

Avianca – ECA-backed financing

Borrower: Aircol 35

Lessee: Avianca

Amount: $184.5 million

Tenor: 12 years after delivery of each aircraft

MLA: Citi

Lenders: Citi and DZ Bank

Facility Agent: Citi

ECA: Euler Hermes

Aerovias del Continente Americano S.A. (Avianca) is one of the largest airlines in Latin America and the overall market leader in the Andean Region (Colombia, Ecuador and Peru) and Central America.

Citi was mandated lead arranger, advisor, co-lender and a facility agent for the Colombian flag carrier’s purchase of five Airbus manufactured aircraft. The airline is undergoing an ambitious fleet expansion and optimisation strategy and was able to secure a 100% guarantee from Paris-headquartered export credit agency Euler Hermes.

The total financing for the five A319s came to $184.5 million that was provided by Citi and DZ Bank, a relatively new bank to the export credit agency space. The limited timeframe in which the deal was closed was notable, with Citi demonstrating swiftness of execution to close the first aircraft facility in just over a week after signing the mandate from borrower in April 2014. The remainder of the aircraft order were delivered between May and December 2014. The tenor of the loan was 12 years following the delivery of each aircraft, leaving all the financing to mature in 2026.

Avianca will lease the aircraft from the borrower Aircol 35. Without the Euler Hermes guarantee it would have been difficult of the borrower to secure such a favourable tenor, highlighting the importance of the export credit agency’s backing.



Dutch exports boosted by Atradius guarantee

The Commonwealth of the Bahamas – ECA-backed financing

Borrower: The Commonwealth of the Bahamas

Tenor: 7 year commercial loan; 12 year Atradius DSB export credit guarantee loan

Total: Eur158.5 million

ECA: Atradius

MLA: Deutsche Bank

Exporter: Damen Shipyards

Deutsche Bank was able to take part as sole financier in a loan to the Commonwealth of the Bahamas for the purchase of patrol vessels by the Ministry of National Security of Bahamas for the purpose of the country’s port facilities enhancement project.

The deal was groundbreaking in the fact that it was one of the first financings to benefit from the Export Credit Guarantee (ECG) made available by the Dutch State and Dutch export credit agency Atradius. The ECG facility aims at sourcing financing for importers around the world at lower costs on the basis of purchasing Dutch capital goods.

Under the ECG scheme, Deutsche Bank was able to sell its commitment on the 12-year ECA loan to a Netherlands-based institutional investor, which became the lender of record and received a first demand guarantee from the Dutch state.

The Eur135.5 million was only able to have such a long-tenor based on the backing of Atradius. The transaction underlines how ECA-supported loans play a pivotal role in helping exporters expand their footprint across the globe.

The financing allows the Ministry of National Security to finance a commercial contract with Damen Shipyards of the Netherlands, which led to the building of a series of coast guard patrol vessels and additional equipment services.

Deutsche Bank was mandated on the basis of a long history with the client and extremely competitive pricing as a consequence of the innovative financing structure.



Largest non-recourse financing in North America

Cameron LNG – ECA-backed Project Financing

Amount: $7.4 billion

Tenor: 16 years

MLAs: Bayerische Landesbank, BBVA, BTMU, Commonwealth Bank of Australia, Credit Industriel et Commercial, Credit Agricole, Deutsche Bank, DNB, Goldman Sachs, Landesbank, HSBC, ING, JP Morgan, Metlife, MUFJ Trust, Mizuho, Natixis, Norinchukin Bank, RBS, Santander, Shinsei Bank, Soc Gen, SMBC, Sumitomo Mitsui Trust, Unicredit, Aozora, Chiba Bank, Shinkin Bank, Shizuoka Bank


Lawyers: Sullivan & Cromwell, Latham Watkins

Sponsors: Sempra Energy (50.2%), Subsidiaries of Mitsui & Co Ltd. (16.6%), GDF Suez S.A (16.6%),  Mitsubishi Corporation (11.62%), Nippon Yusen Kabushiki Kaisha (4.98%)

EPC Contractor: Joint venture between Chicago Bridge & Iron and Chiyoda.

The landmark financing for the Cameron LNG liquefaction project in Hackleberry, Louisiana marked one of the largest non-recourse financing in North American history with $7.9 billion in long-term, fully amortising debt. The commercial bank tranche of the loan, at $2.9 billion, is the largest North American non-recourse financing to be executed at such a long tenor of 16 years.

The facility, which will be built next to Sempra Energy’s existing regasification facility will benefit from existing infrastructure, including LNG storage tanks and berths for ships. The vast, three-train, 13.5 million tonne per annum project is unprecedented in bringing together US, European and Asian developers and offtakers in a North American LNG facility. Sponsors of the project will, as a result, be able to send the LNG to premium markets in Asia.

Cameron LNG has contracted 100% of its total capacity as part of three separate and identical 20-year tolling agreements with GDF Suez and affiliates of Mitsui and Mitsubishi. It was the first time that the Japan Bank for International Cooperation and Nippon Export and Investment Insurance was involved in a downstream transaction in North America. The Japanese export credit agency guaranteed a $2.5 billion tranche while the insurer covered a $2 billion tranche. While one of the tranches remains uncovered at $2.9 billion, the lenders on the deal also benefitted from a number of completion guarantees from the sponsors.

Advisors on the project included technical support from Lummus, insurance from JLT Specialty limited, and market consultation from Poten & Partners. The legal advisor to the sponsors was Sullivan & Cromwell, while Latham Watkins advised the lenders.


Citi sets sights on Mexican oil service sector

Central Panuco – ECA-backed Financing

Amount: $172.2 million

Tenor: 10.5 years (with a two-year availability period)

Borrower: Central Panuco

Guarantors: Perforadora Central, Exploraciones y Perforadora Central

MLA: Citi

Lender: Citi

Facility Agent: Citi

ECA: Export-Import Bank of the United States

Citi acted as the sole mandated lead arranger and bookrunner on the entire $172.2 million facility that has been 100% backed by the Export-Import Bank of the United States. The facility partially finances the construction of a jack-up drilling rig, which is being built at the Keppel AmFELS shipyard in Texas.

The deal is the third transaction that Citi has arranged for Perforadora Central with the support of US Ex-Im, reflecting the commitment of the bank to providing the company with the best pricing and expertise in export credit agency financing.

The strong market appetite for the asset allowed Citi to sell down to two additional financial institutions, including one bank that had never before participated in a US Ex-Im transaction before.

The facility’s long-tenor was one of the most noteworthy points, with the 10.5-year maturity being necessary as drilling rigs are capital-intensive investments that have lives exceeding 20 years, requiring longer repayment terms. The transaction is an example of how export credit agency backing allowed Central Panuco to obtain attractive and suitable financing given complicated market conditions. The loan will disburse during the construction period and will rely on a bareboat charter with Perforadora Central for repayment.

Central Panuco is a subsidiary of Mexican oil and gas company Perforadora Central, which specialises in land and marine well drilling and dredging of waterways, offshore inspections, transportation and construction. The company counts Petroleos Mexicanos (Pemex) as one of its major clients. Central Panuco provides equipment for the construction and drilling of oil and gas wells along with the leasing of platforms for the same purpose.




Chercan benefits from vast pre-delivery financing

Chercan Leasing – Pre-Delivery Payments Financing

Amount: $366 million

Tenor: 20 months

Borrower: Chercan Leasing Limited (Cayman Islands)

Guarantor: LATAM Airlines Group

MLA: Santander

Lenders: Santander Chile, Santander, Bladex

Legal Advisors: Clifford Chance, Allen and Overy, Maples; Philippi, Yrarrazaval, Pulido y Brunner

Exporters: Airbus, Rolls Royce, CFM

Santander and Bladex’s $366 million financing to Cayman Islands-based Chercan Leasing Limited is one of the largest pre-delivery payment financings ever, given the number of aircraft and engines involved and the total financing volume. Thirty-one Airbus A321 aircraft with CFM56-5B3 engines and five Airbus A350 aircraft with Rolls Royce engines were financed as a result of Santander’s involvement.

The strong cooperation between Banco Santander and Bladex is particularly notable, with the two financial institutions having worked together on several occasions, highlighting strong confidence in the region.

The legal structure of the facility was extremely complex, requiring increased legal analysis and input in the structure from several law firms because of the multiple jurisdictions involved in the deal. English law was used for the facility agreement, with analysis of Chilean and Cayman Island law involved as well.

Clifford Chance provided legal advice to the borrower, Allen and Overy to the lenders, while Maples was the Cayman Islands law counsel and Philippi, Yrarrazaval, Pulido y Brunner provided counsel on Chilean law. The deal was also extremely technically and commercially difficult as a result of the simultaneous negotiation of the procurement contracts with two separate engineering manufacturers.

The facility has allowed one of the biggest airlines in Latin America to achieve a structure that was commercially, technically and legally strong and that mitigated as many legal and commercial risks associated to this type of transaction as possible.



MIGA-backed loan boosts Brazilian infrastructure

El Estado de Sao Paulo – MIGA-backed buyer credit facility

Amount: $300 million

Tenor: 12 years

Borrower: El Estado de Sao Paulo

Guarantor: La Republica Federativa de Brasil

ECAs: Multilateral Investment Guarantee Agency (MIGA)

Law firms: Clifford Chance

MLA: Banco Santander

Santander’s loan to El Estado de Sao Paulo for $300 million was the first ever policy covering non-honouring of sovereign financial obligations ever issued by the Multilateral Investment Guarantee Agency (MIGA) in Brazil, and the first World Bank Group deal in the country in over a decade.

The agreement allows for a tailor made disbursement schedule designed to cater to the needs of the project and the State of Sao Paulo, rather than being reliant on any export contract milestones.

The loan will bridge an infrastructure financing gap improving Sao Paulo’s transportation system. Two bridges will be built on the Tiete River and 650km of roads will be upgraded as a result of the funding. 

MIGA’s involvement, covering the risk of sovereign financial obligations not being honoured for 12 years, allowed Santander to offer a longer tenor and more competitive pricing than would otherwise have been available.

The terms offered to the State of Sao Paulo were very favourable when compared to general sources of funding such as BNDES or international bonds. The financing provided by Santander and covered by MIGA went side-by-side with an additional direct loan from the World Bank for the same infrastructure project, making this one of the most important public/private partnerships in the region in recent times.



Innovative structure employed for Empire Resources RCF

Empire Resources – Dual Borrowing Base Revolving Credit Facility

Amount: $225m

Tenor: 3 years

Borrower: Empire Resources

Lenders: Rabobank (MLA, Agent), BNP Paribas (Documentation Agent), Societe Generale, ABN Amro, RBI

Lawyers: Emmet, Marvin & Martin LLP

Rabobank’s $225 million facility for Empire Resources was the first in the market with a dual borrowing base both supporting the committed and uncommitted portions of the deal. The funding is to be put towards working capital for the firm. It consisted of a three-year $150 million senior secured committed revolving credit facility and a $75 million senior secured uncommitted revolving credit facility. Rabobank acted as sole lead arranger, bookrunner and administrative agent for both of the facilities.

Rabobank formulated an innovative structure that provided Empire Resources the flexibility and liquidity it required. The existing $200 million was upsized and replaced, and the refinanced deal included both existing relationship banks as well as a new bank. The syndication process resulted in an oversubscription for both facilities and both transactions were closed after collaboration with a number of teams within the banks.

The deal demonstrates Rabobank’s leadership position in the metals and minerals segment, especially as it is the first of its type in the metals space.

Empire Resources is engaged principally in the purchase, sale and distribution of semi-finished ferrous and non-ferrous metal products, including sheet, coil, plate, and foil aluminum products, as well as stainless and carbon steel, to a diverse customer base located throughout the Americas, Europe, Australia and New Zealand. The company sells primarily to distributors and OEMs in metal working industries such as automotive, housing and packaging.




EDC bond issuance returns oversubscribed

Export Development Canada – $1bn bond

MLAs: Citi, Daiwa, Morgan Stanley, TD Securities

Amount: $1 billion

Tenor: 5 years

Borrower: Export Development Canada

Export Development Canada’s third, and final, dollar benchmark bond issuance of 2014 was one of the most anticipated in the year, coming in well oversubscribed although the borrower opted to stick with the initial request of $1 billion.

The final book size was $1.5 billion with orders coming from 58 accounts spread very evenly throughout the world.

Mandated lead arrangers Citi, Daiwa, Morgan Stanley and TD Securities priced the no-grow five year bond at mid-swaps minus 2 basis points, making it the tightest-priced five year versus mid swaps the export credit agency was able to execute since 2012. There were 16 co-managers on the issuance. Export Development Canada opted for a five-year maturity though left the option for a three-year tenor as well in the event that the market was not prepared to commit for a five-year bond.

The bond was so in demand that indications of interest surpassed the $1 billion mark within an hour of the issuance being announced, with little to no push back on pricing. Interest was especially high based on the export credit agency’s low volatility and extremely diverse portfolio.

The size of the bond, stature of the financial institutions lending and the geographical spread of lenders demonstrates the strength of Export Development Canada’s appeal to financiers and confidence will be high as it expects to increase its issuances further in 2015.



Japanese banks supported by ECAs for Freeport Train 1

Freeport LNG Train 1 – ECA-backed Project Financing

Amount: $4.369 billion

Tenor: 22 years

MLAs: Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation, Mizuho Bank, Sumitomo Mitsui Trust Bank, Mitsubishi UFJ Trust, ING Bank (Tokyo branch)

ECAs: Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI)

Lawyers: White & Case

Unlike most recent LNG liquefaction projects, Freeport LNG went for the unique option of financing each of its four liquefaction trains separately. Project costs of the $5.32 billion Train 1 are being split 75/25 between debt and equity.

The loan contains a $3.903 billion senior secured construction debt that is guaranteed by the Japan Bank of International Cooperation and Nippon Export and Investment Insurance, which allowed the facility to have an exceptionally long 22-year tenor.

In addition to the direct project costs for Train 1, the sponsors of Train 1 (along with the sponsors of Train 2) are contributing 100% of the costs of the expanded common facilities that will be shared by the existing regasification terminal as well as Trains 2 and 3. The facilities will be jointly owned by Trains 1-3 (at the closing of the Train 3 financing, the Train 3 sponsors will reimburse the sponsors of Trains 1 and 2 for Train 3’s share of the funding obligation).

The Freeport LNG project covers the construction and operation of three LNG liquefaction trains and expanded common facilities located on Quintana Island near Freeport, Texas at the site of the Freeport LNG regasifaction terminal.

Train 1 is being constructed over a four-year period beginning in November 2014 and should be able to achieve commercial operation in late-2018. Each of the trains is expected to have a capacity of 4.6 million tonnes per annum, giving the total project a 15 million tonne per annum capacity. All of Train 1’s capacity is reserved under 20-year tolling agreements with Japan’s Osaka Gas and Chubu Electric, with equity sponsors including the two offtakers and Freeport LNG.

ING also arranged a $42 million five-year bilateral cash-collateralised letter of credit with Freeport LNG (as Train 1 sponsor) for their share of $84 million in excess equity contingencies for Train 1’s share of the costs of the common facilities for the benefit of Train 2 lenders.



Unique structure in place for Freeport LNG trains

Freeport LNG Train 2 – Project Financing

Amount: $4.025 billion

Tenor: 7 years

MLAs: BBVA, BMO Capital Markets, Barclays, CIBC World Markets, Credit Agricole CIB, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, ING, Industrial & Commercial Bank of China – ICBC, Intesa Sanpaolo SpA, Lloyds Banking Group, MetLife Inc, Mitsubishi UFJ Financial Group, Mizuho, Natixis, RBC Capital Markets, RBS, SG Corporate & Investment Banking, Santander, Scotiabank, Standard Chartered Bank, Sumitomo Mitsui Financial Group, General Electric

Insurers: QBE Insurance

Unlike most recent LNG liquefaction projects, Freeport LNG went for the unique option of financing each of its four liquefaction trains separately. Project costs of the $5.28 billion Train 1 are being split 75/25 between debt and equity.

The $4.025 billion in senior secured construction debt consists of: (i) a $3.975 billion seven-year bank construction/term loan and (iii) a $50 million 7-year working capital facility. $1.32 billion in construction equity is being funded entirely with cash equity, contributing by the project’s sponsors.

ING also provided the project with its first deal-contingent pre-hedge which secured ING with the hedge coordinator mandate.

The Freeport LNG project covers the construction and operation of three LNG liquefaction trains and expanded common facilities located on Quintana Island near Freeport, Texas at the site of the Freeport LNG regasification terminal.

Train 2 is being constructed over a four-year period that began in November 2014 and should be able to achieve commercial operation in late-2018. Each of the trains is expected to have a capacity of 4.6 million tonnes per annum, giving the total project a 15 million tonne per annum capacity. All of Train 1’s capacity is reserved under 20-year tolling agreements with BP Energy Co., the US affiliate of BP. Train 2’s equity sponsors include Freeport LNG and IFM Investors.

In addition to the direct project costs for Train 2, the sponsors of Train 2 (along with the sponsors of Train 1) are contributed 100% of the costs of the expanded common facilities that will be shared by the existing regasification terminal as well as Trains 1 and 3. The new plant will be jointly owned by Trains 1-3 (at the closing of the Train 3 financing, the Train 3 sponsors will reimburse the sponsors of Trains 1 and 2 for Train 3’s share of the funding obligation).



Interstate 4 PPP strengthens Florida infrastructure

Interstate 4 – Project Financing

Amount: $1.3 billion

MLAs: BTMU, KfW Ipex-Bank, CIBC, SEK, Societe Generale, Credit Agricole

Facility Agent: BTMU

Syndication Agent: Societe Generale

Documentation Agent: CIBC

Financial Advisory Sponsors: Societe Generale

Legal Advisory Sponsors: Ashurst

Legal Advisory Lenders: Latham & Watkins

Insurance Advisory Lenders: Intech Risk Management

Sponsors: Skanska and John Laing

The $1.3 billion deal is the largest availability payment-based transaction in the United States to date. The design-build-finance-maintain concession combines short-term commercial bank debt and debt from the US Department of Transport under its Transportation Infrastructure Finance and Innovation Act (TIFIA) lending programme. The two-tranche TIFIA loan is notable both as the largest that US Department of Transport has ever provided and for combining long and short tranches.

The Interstate 4 Ultimate project is a public-private partnership concession agreement to design, build, finance, operate and maintain 21 miles of Interstate 4 from West Kirkman Road in Orange County to east of State Road 434 in Seminole county. The I-4 Ultimate project includes reconstructing 15 major interchanges; constructing more than 140 bridges; adding four variable-priced toll express lanes in the median; and completely rebuilding the general-use lanes along the entire corridor. The express lanes will be operated with variable tolls which will be adjusted to improve traffic flow throughout the corridor.

Legal advice was provided to the sponsors by Ashurst and the lenders by Latham & Watkins.



OPIC and Wells Fargo bolster Itau’s SME lending

Itau Unibanco – Co-lending facility

Borrower: Itau Unibanco

Amount: $480 million

Tenor: 6 years

MLA: Wells Fargo Bank

DFIs: Overseas Private Investment Corporation

Law Firms: White & Case, Pinheiro Neto, Maples & Calder, Mayer Brown, Thompson Hine

Wells Fargo and the Overseas Private Investment Corporation’s $480 million loan to Itau Unibanco was an unusually large transaction in Brazil for the development bank and stands out as one of the largest direct loan commitments recently made by a DFI for a financial institution.

The purpose of the loan is to fund Itau Unibanco’s lending to small and medium-sized enterprises, primarily those located in Northern and Northeastern Brazil.

The deal comprised of a club of two institutions (Wells Fargo and OPIC) providing a large co-financing facility, which entailed a hybrid loan and 144A placement structure.

The large size and hybrid structure make the transaction unusual and highlight the breadth and sophistication of Itau group’s use of official and developmental funding agencies. OPIC’s tranche, in the form of an OPIC-guaranteed certificate of participation, was placed with US investors by Wells Fargo Securities.

White & Case LLP, Walkers, and Pinheiro Neto and Maples & Calder acted as counsel to OPIC; Mayer Brown LLP as counsel to the borrower, and Thompson Hine LLP as counsel to Wells Fargo bank and Wells Fargo Securities.



Jeffries Bache oversubscribed in syndication

Jeffries Bache – Committed Secured Borrowing Base Revolving Credit Facility

Amount: $750 million

Tenor: 3 Years

MLAs: JP Morgan Chase, Natixis, BMO Harris Bank

Lenders: JP Morgan Chase, Natixis, BMO Harris Bank, BNY Mellon, Deutsche Bank, Standard Chartered, Citibank, US Bank, Bank of America, HSBC Bank, PNC Bank

Lawyers: Winston & Strawn LLP

The loan refinanced Jefferies Bache’s existing syndicated secured credit facility that was initially set up in 2011, to finance the brokerage business then acquired by Jefferies from Prudential.

The credit facility has a unique structure in that it applies the typical trade finance borrowing base structure to a brokerage firm.

Jefferies Bache’s brokerage business notably consists of granting initial and variation margin financings to its clients and of trading physical metals with its clients. These activities generate current assets, respectively accounts receivables and inventories, against which Jefferies Bache can borrow under the borrowing base structure. Accounts receivables consist of the margin loans granted by Jefferies Bache to its clients, which are mostly commodities-trading firms across the world.

Inventories mostly consist of physical precious and base metals acquired by Jefferies Bache in order to hedge against certain positions taken by their clients.

The credit facility is highly regarded by Jefferies as it allows financing the liquidity needs arising from its brokerage business. In addition, the credit facility allows Jefferies to monetise a portion of the current assets generated by this business, which contributes to the company’s overall available liquidity and capitalisation and improves its perception by the rating agencies. Jefferies relied on Natixis’ expertise in commodity-trade finance, notably for the sizing of the various accounts receivables concentration limits in a way that would both meet Jefferies Bache’s needs and provide satisfactory receivables diversification for the lenders.

The credit facility was successfully syndicated to eight financial institutions in addition to the mandated lead arrangers and was oversubscribed with $800 million in commitments.



Kia Motors makes splash in Mexico

Kia Motors – ECA-backed Credit Facility

Borrowers: Kia Motors Mexico

Guarantor: Kia Motors Corporation

Amount: $578m

Tenor: 10 years

Availability Period: 3 years

Repayment period: 7 years

ECA: K-Sure

MLAs: Citi, HSBC, JP Morgan, ING, Mizuho

Lawyers: Allen & Overy, Kim & Chang

The $578 million Kia Motors Mexico facility was seen as the leading automotive financing of 2014, with the term debt facility complementing an equity contribution from Kia Motors Corporation. This was Kia’s first investment in manufacturing capacity in Mexico, following on from the success of its Georgia-based facility in the USA, which opened in 2009 and is now operating at capacity. The financing will realise the construction of a new automotive manufacturing and assembly plant in the state of Nueva Leon in Mexico.

The transaction was completed with considerable speed: financial close and funding completed within just two months of the appointment of Citi, HSBC, JP Morgan, ING and Mizuho as MLAs.

Korean insurer K-Sure guaranteed the financing under its 100% overseas business financing insurance policy. Allen & Overy and Kim & Chang provided legal advice.

Kia Motors required flexibility in relation to drawing and allocation of funds and as a result an “untied” facility was deemed most appropriate, with use of proceeds covenanted by Kia to meet lender requirements. Kia also required rapid execution and funding to meet its investment programme.

The rapid execution required flexible and innovative thinking on the part of the sponsors, K-Sure, and the lenders in order to accommodate the lenders’ and sponsors’ timing requirements, with coordination of the North American based MLA and lending group with the Korea-based K-Sure and sponsor team.

The project cements Mexico as a location of choice within the Americas for automotive equipment manufacturers. It is the first significant investment made by Kia in the country.



Mercuria granted sizeable accordion loan

Mercuria – Committed Secured Borrowing Base Revolving Credit Facility

Amount: $2.9 billion

Tenor: 364-day $2.32bn, 3-year $580m

MLAs: Societe Generale, Natixis, BTMU, BNP Paribas

Lenders: Credit Agricole, ABN, Rabobank, ING, Mizuho, HSBC, Lloyds, StanChart, Deutsche Bank, Scotiabank, BoA, Fifth Third Bank, SMBC, Sumitomo Trust

Lawyers: Bracewell & Giuliani

The credit facility supported Mercuria’s acquisition of JP Morgan’s commodity trading platform. This acquisition is a landmark strategic move in the commodities trading space during 2014, as big banks are selling or reducing their commodities operations in light of the growing regulatory pressures. This acquisition allowed Mercuria to solidify its existing North American presence and to complement its existing activities with physical trading operations in the North American natural gas and power businesses and to bring in a large number of new North American counterparties in order to become a key player in this geographic area.

The credit facility is structured to accommodate the working capital needs of Mercuria’s post-acquisition business. The $580 million, three-year tranche of the credit facility notably provides funding and credit enhancements – letters of credit – for the new physical natural gas and power businesses, which  typically involve longer term transactions.

In addition, an original “committed accordion feature” is included in the credit facility. Although the credit facility closed at $1.45 billion, this mechanism allows Mercuria to progressively increase the facility amount (up to $2.9 billion) as the novation of the contracts from JP Morgan ramps up Mercuria’s working capital needs; the original feature of this mechanism is that the banks in the credit facility are already credit-approved to fund this increase, thereby allowing a seamless novation between JP Morgan and Mercuria. 



ECA-backed loan to develop Chilean metro

Metro de Santiago – ECA-backed Project Financing

Borrower: Empresa de Transporte de Pasajeros Metro S.A

Amount: $800m

ECAs: CESCE, Coface

Lawyers: White & Case

MLAs: BNP Paribas S.A., BNP Paribas Fortis Bank NV-SA, Sumitomo Mitsui Banking Corporation,  Sumitomo Mitsui Banking Corporation Europe Limited Paris Branch, Societe Generale, ING Bank, a branch of ING-DIBA AG, KFW IPEX-Bank GmbH, Banco Santander, S.A., Credit Agricole Corporation and Investment Bank, Mizuho Bank, Ltd., Mizuho Bank, Ltd. Paris Branch.

Bookrunners: BNP Paribas, SMBC

The Santiago metro system is South America’s most extensive subway system with over one hundred stations, the second longest in Latin America after Mexico City. It has the fourth largest ridership in the Americas, carrying over two million passengers a day. The facility, to expand the system, benefitted  from insurance from CESCE (the Spanish export credit agency), Coface (the French export credit agency), and a commercial tranche.

The CESCE-backed tranche was for $450 million, while Coface insured a $100 million tranche, both of which had a tenor of 14 years. The $250 million commercial tranche had a 12-year tenor, with eight commercial banks taking part following a successful syndication. The combination of ECA financing and  the commercial tranche allowed the tenor to be maximised. The overall project is one of the largest ever in Chile, with unique financing in place. It is the first time ECA financing has taken place in the country since it was upgraded by the OECD. CESCE’s $450 million tranche was the largest the Spanish export credit agency had ever covered. An element of flexibility was built into the commercial facility in order to allow disbursements from the tranche while export contracts are still under negotiation.

The project also includes the improvement of the existing network and represents a total capital expenditure consideration of $3.3 billion, all of which is financed by a combination of debt and equity.

Many of the municipalities covered by the metro upgrades are made up of low-income families so the option for cheaper public transport will bring an economic boost to the surrounding areas.



US Ex-Im backs Pemex investment drive

Pemex – ECA-backed Guaranteed Notes

Amount: $1 billion

Tenor: 10.5 years

ECA: Export-Import Bank of the United States

Borrower: Petroleos Mexicanos (Pemex)

MLAs: Santander, BNP Paribas, Citibank

In the wake of Mexico’s historic energy reform, Pemex continues to invest heavily to secure its leadership in the market and take advantage of the new opportunities that this reform will bring.

As part of its investment plan, Pemex has maintained its significant purchase programme of American-made oil-field and gas-field drilling services, drilling platforms, turbine generators, mud pumps and spare parts – among numerous other components.

Pemex, seeking to balance and diversify its financing sources, took the opportunity to leverage US Ex-Im Bank’s support for the purchase of these goods, issuing a bond of $1 billion wrapped by the export credit agency.

This transaction was structured with US Ex-Im Bank’s support under a pre-funded structure, an immediate capital market take-out directly from the bond market without the need for banks to fund the guaranteed loan.

The issuance of the bond was divided into two tranches, one floating and one fixed. These were launched one week apart despite the markedly increased volatility in the markets and the impact of the negative global growth outlook received from the IMF weeks before the issuance.

Each tranche was valued at $500 million. The floating tranche was issued first and was solidly anchored around a group of US regional banks, whose demand allowed the issuer to price the bond at very attractive levels, reaching a spread of 35 bps for the 10 year deal. This level came significantly below Pemex’s last US Ex-Im Bank backed bond print in September 2013.

The second tranche was issued one week later and was anchored around US asset managers, and further drew strong interest from investors not usually seen participating in US Ex-Im Bank deals.

With the book two times oversubscribed, this transaction generated the largest absolute volume of orders in this sector, allowing syndicates to tighten pricing to the bottom end of guidance.



Three ECAs feature in complex Sprint financing

Sprint – ECA-backed Export Financing Facility

Amount: $1.8 billion

MLAs: Credit Agricole, Deutsche Bank, Mizuho, SMBC, MUFG, BNP Paribas, RBS, Nordea, KfW

ECAs: Delcredere Ducroire, K-Sure, Finnvera

Borrower: Sprint

Tenor: 7-year ($250 million), 8-year ($750 million), 6.5-year ($800 million)

Lawyer: Allen & Overy, Jones Day

Sprint received $1.8 billion as part of a three-tranche financing in order to upgrade its 2.5 GHz network with equipment exported by telecoms suppliers.

The first tranche, a $250 million facility with a seven-year tenor, was backed by Delcredere Ducroire. The amount represents the largest commitment by the Belgian export credit agency and was instrumental in financing the shipments from Alcatel-Lucent.

Given a large volume of purchases from Korea’s Samsung, the country’s export credit agency, K-Sure, agreed to provide backing to an eight-year $750 million tranche. This particular tranche required the MLAs to work closely with K-Sure to understand the US telecoms sector and overcome constraints to provide backing. Finland’s Finnvera provided coverage for the third, and largest, tranche of $800 million. This enabled the supply of equipment from Nokia.

It was not the first time Sprint had received export credit agency backing but it was the largest by a significant margin and was carried out so that its credit availability in the bank market would not be significantly impacted.

The financing took several months to pull together through a concerted coordination between Credit Agricole, Sprint, Delcredere Ducroire and K-Sure to arrive at common terms that would also be aligned with Finnvera’s and finding the appropriate level of comfort to secure optimal support from each ECA and provide Sprint with a large global financing for its large capex investment. It was the first venture into the US telecoms space for both K-Sure and Delcredere Ducroire.



Trafigura Peru exports enhanced by borrowing base

Trafigura Peru – Syndicated Borrowing Base Facility

Borrower: Trafigura Peru

MLAs: ABN Amro, Natixis

Lenders: Standard Chartered, Credit Agricole, Itau, BTMU, Societe Generale, Rabobank, BCV, Scotiabank

Amount: $751 million

Tenor: 1 year

Lawyers: Watson Farley Williams, Miranda & Amado, Van Doorne

A new borrowing base (BB) facility was tendered to fund the export business managed by Trafigura Peru early in 2014. Natixis and ABN Amro successfully bid for the bookrunner and mandated lead arranger roles with Natixis acting as facility and documentation agent and ABN AMRO acting as syndication agent. In June, both banks started supporting the company through a bridge loan facility (with a similar BB structure) while the details of the reorganization and of the permanent BB facility were being finalised. The bridge loan was increased by the accession of four additional banks in July.

The final structure of the BB was sized at $751 million on November 7, providing ample financing cushion for the group’s activities in the region. Trafigura Peru is part of global commodities trading giant Trafigura Beheer BV. The company sources, stores, blends and delivers oil, oil products, base metals, iron ore and coal with operations in 36 countries.

Its Peruvian operations, which started in the early 1990s, focus on base metals and concentrates mainly sourced, stored and blended in Peru and neighboring countries and sold worldwide.

These operations were restructured as part of a group reorganization plan implemented globally.

As a result, two new operational entities were created to conduct business in Peru: Trafigura Metales Basicos, which is responsible for the local Peruvian sales, and Trafigura Peru, which is responsible for export sales. 

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