CLIFFORD CHANCE PRESS RELEASE
Clifford Chance advised the co-ordinating lead arrangers (Citigroup and Industrial and Commercial Bank of China) on the US$3.4 billion Integrated Petrochemical Site financing for Sinopec and BASF in Nanjing, PRC. Other commercial lenders involved in the deal included Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Communications.
The deal represents another landmark financing for China. It is the largest ECA-supported limited recourse financing in China to date; it is also the first market risk-based limited recourse financing in the PRC petrochemical sector and the first involving both domestic and foreign currency lenders and export credit on a pari passu basis. The Project is an import substitution project. With nine integrated petrochemical facilities producing approximately 1.7 million tpa of ethylene and propylene derivatives, related by-products and downstream chemicals, the Projects' product diversification and potential for revenue optimisation is unique in the Chinese petrochemical market.
Clifford Chance advised on and documented the entire financing. An interesting aspect was the interfacing of captive and out-sourced facilities (CCGT, Syngas, air separation and waste water treatment facilities) and related services within the combined financing of the Project. Inter-creditor solutions were also developed to accommodate both domestic and foreign currency lender issues, as well as German (Hermes) ECA requirements. The firm also advised on structured completion support with the financial advisers, minimising substantial balance sheet cost for the sponsors, SINOPEC and BASF.
The Clifford Chance team was led by Hong Kong based Robert Caldwell and Derek Parker, and included Associates Carolyn Dong, Valerie Hoong and Eva Lo and also Beijing-based Partner Gao Peiji, with Leonard Cleland and Tobias Schulten from the Frankfurt office on German law matters relating to the Hermes cover.
Robert Caldwell commented: "This has been a very interesting and complex deal for our team and also for other members of Clifford Chance's Project Finance Group, involving our Hong Kong, Frankfurt and PRC offices, and a first for the PRC petrochemical and energy markets. We are delighted with its success, and are privileged to have been involved with our clients and these sponsors in yet another landmark China financing. It is very satisfying to play a part in pulling together domestic and international financing into a major project with world class technology."