China Automation Group and Hang Seng launch renminbi syndicated loan

The Multi-Currency Transferable Term Loan Facility is comprised of a 50mln renminbi facility, a 40mln US dollar facility and a 22mln HK dollar facility.

China Automation Group Limited on Monday signed a USD 50 million equivalent Multi-Currency Transferable Term Loan Facility (the “Facility”) agreement with Hang Seng Bank and nine other banks. The Facility, lead-arranged by Hang Seng, included the first-ever renminbi syndicated loan facility in Hong Kong – marking an important milestone in the development of Hong Kong’s renminbi offshore market, according to a China Automation Group report.

With an overwhelming response from the banking sector, the 3.5-year Facility was oversubscribed and upsized from its original target of USD 40 million equivalent to USD 50 million.

The Facility is comprised of a 50 million renminbi facility, a 40 million US dollar facility and a 22 million HK dollar facility. The annual interest rate for the renminbi facility is set at Hang Seng Renminbi Prime Rate plus 1.35 per cent (equivalent to 4.6 per cent per annum as of 6 December 2010), while the US dollar and HK dollar facilities carry annual interest rates of 2.85 per cent over LIBOR and 2.85 per cent over HIBOR respectively.

As one of China’s largest integrated solutions providers of railway signaling systems, and the largest integrated solutions provider of safety and critical control systems in the petrochemical industry, China Automation Group intends to use the syndicated loan to finance the investment, capital expenditure and general corporate requirements of the Group.

Mr Richard Xuan, Chairman of China Automation Group, said: “China Automation Group is delighted to have joined hands with Hang Seng as a pioneer in this multi currency syndicated loan. This ground-breaking syndicated financing that includes an RMB facility signifies the beginning of Hong Kong’s RMB offshore financing. We believe that RMB offshore financing will be a valuable option for companies in Hong Kong with significant business exposure in China. This landmark transaction lays a solid foundation for the development of renminbi offshore financing in Hong Kong.”

Mr Donald Lam, Assistant General Manager and Head of Commercial Banking at Hang Seng Bank, said: “Hang Seng is honoured to have been appointed as the Mandated Coordinating Arranger and Facility Agent for China Automation Group’s debut syndicated loan fundraising deal. The Facility also represented the breakthrough of offshore renminbi syndicated financing in the region and will further promote the development of the renminbi offshore market in Hong Kong. ”

The loan syndicate comprises Hang Seng Bank Limited; Australia and New Zealand Banking Group Limited; Hua Nan Commercial Bank, Ltd., Hong Kong Branch; Allied Banking Corporation (HK) Ltd; PT. Bank Negara Indonesia (Persero) Tbk, Hong Kong Branch; The Bank of East Asia, Limited; Far Eastern International Bank Co., Ltd., Hong Kong Branch; Industrial Bank of Taiwan, Hong Kong Branch; Taiwan Business Bank Hong Kong Branch; and The Shanghai Commercial and Savings Bank, Ltd. Hong Kong Branch. Hang Seng Bank is the Mandated Coordinating Arranger and Facility Agent for the Facility.