Xiamen Xiangyu steel plant closes ECA-covered loan
Obsidian Stainless Steel – a joint venture between China’s state-owned Xiamen Xiangyu (51%) and Jiangsu Delong Nickel Industry (49%) – reached financial close on a Rmb6.88 billion ($1.06 billion) debt package to finance the Xiamen Xiangyu integrated steel plant in Indonesia. The scheme marks one of the south east Asian country’s largest smelters in the Virtue Dragon Industrial Park in South Sulawesi.
The Rmb13.4 billion project, comprising a nickel mine, a five million metric tonnes per year stainless steel smelter; a 44MW coal-fired power plant; and a 40 million metric tonnes multi-functional port, was launched in September 2017 when China’s National Development and Reform Commission approved the project. China-based Suzhou Thvow Technology is EPC contractor for the thermal plant.
The multi-layered facility was denominated in Chinese yuan and US dollar. Financed on a 51/49 debt-to-equity ratio, the 6.75-year loan was provided by Bank of China (MLA, financial adviser, and facility agent); China Development Bank; China Construction Bank; ICBC; Agricultural Bank of China; CITIC bank; China Merchants Bank; and Tai Fung Bank. The loans were priced off loan prime rate (LPR), a benchmark lending rate adopted by commercial banks in China.
The facility, which has 24-month drawdown period, with interest paid semi-annually, comprises three tranches: tranche A (Rmb) – about $886 million, priced off 5-year LPR+, with cover from Sinosure; tranche B (dual-currency) – priced off 5-year LPR+, at a rate 25% higher than Sinosure; and Tranche C (dual-currency) – off 6-month Libor.
Ping An Insurance covered tranches B and C, which had a combined principal of around $884 million. The Chinese lenders punched tranche A’s ticket, while Tai Fung Bank, BOC Jakarta, BOC Singapore and ICBC Indonesia were on tranches B and C. Pinsent Masons acted as lenders’ legal counsel.
