DLA Piper advises PRC bank syndicate on offshore $195m financing

DLA Piper has advised a syndicate of banks consisting of ABN AMRO Bank NV, Natixis and Société Générale on a $195m prepayment facility for Xinjiang Zhaokun Trading Co Ltd to finance the purchase and production of aluminium and to refinance an existing prepayment facility provided by Zhaokun’s existing offtaker, Gerald Metals SA.

The three-year senior secured loan marks the company’s offshore syndicated loan debt and has $125m in commitments ahead of the syndication of an accordion tranche of up to $70m.

The facility benefits from a complex security package containing typical commodity finance structures interlinked with onshore asset security. The facility also benefits from unsecured offshore corporate guarantees from members of Zhaokun’s group.

Certain members of the offtaker group are also participating as lenders in the facility and are providing a performance guarantee as well as a third-party limited recourse guarantee, which required some innovative structuring and drafting to balance the obligations of a guarantor against the rights of a participant in the syndicate and the inevitable effect on voting rights.

The team was led by partner Jolyon Ellwood-Russell, with assistance from senior associate Catherine Arlin.