ICBC London contributes to $349 million amended syndicated PXF facility to KAZ Minerals Finance PLC in 2014

📋 Staff Comments

1. A pre-export finance (PXF) facility an arrangement in which a commodity (e.g. oil) producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed.
2. The exact size of the individual contribution of Bank of China to the lending syndicate is unknown. For the time being, AidData assumes Bank of China maintained its original contribution to the 2012 $1 billion PXF facility, which when assuming equal contributions across all 15 members of that syndicate comes to $66,666,666.
3. The margin payable on the amended facility was variable, ranging from 3.0% to 4.5% above USD LIBOR, dependent on the ratio of net debt to EBITDA which was to be tested semi-annually. An average of this margin has been entered for the purposes of this record. In KAZ Minerals' 2015 Annual Report, 3.69% was reported as the average interest rate for the facility during 2015.
4. KAZ Minerals plc is a British copper company focused on large scale, low cost open pit mining in Kazakhstan. The Group is listed in London and Kazakhstan stock exchanges.
5. The agent for the transaction was Deutsche Bank AG and the security trustee was ING Bank.
6. The original bank account pledge agreement can be accessed in its entirety via https://www.dropbox.com/s/emfjlvw9dp2tnb3/Bank%20Account%20Pledge%20Agreement%20for%202012%20Kaz%20Minerals%20PxF%20Facility%20Agreement.pdf?dl=0.
7. The original trader assignment agreement can be accessed in its entirety via https://www.dropbox.com/s/0fwapxcvbhfbslv/Trader%20Assignment%20Agreement%20for%202012%20Kaz%20Mineral%20PxF%20Facility%20Agreement.pdf?dl=0.

📚 Sources & References

• Annual Report and Accounts 2014
• Annual Report and Accounts 2015
• Bank Account Pledge Agreement
• IJ 2008
• KAZ Minerals SHAREHOLDER CIRCULAR 23 July 2014
• Kazakhmys - pre-export finance
• Kazakhmys Additional Facility 2014
• KAZAKHMYS ANNOUNCES THE SIGNING OF AN AMENDMENT TO ITS EXISTING PRE-EXPORT FINANCE DEBT FACILITY
• Kazakhmys plc : - Replacement Pre-Export Finance Debt Facility
• KAZAKHMYS PLC AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
• Kazakhmys secures replacement pre-export finance debt facility
• Kazakhmys: Signing of an amendment to existing PXF
• Trader Assignment Agreement Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.