Shearman & Sterling advised on two deals that were honored with awards from IFR Asia for 2011, highlighting the strength of the firm’s cross-border and cross-practice teams. IFR Asia is a leading publication covering Asia’s capital markets.
Loan of the Year
Shearman & Sterling represented the Aditya Birla Group in connection with the complex, three-part multinational US$900 million financing related to the acquisition of Atlanta-based Columbian Chemicals Company (CCC) from One Equity Partners, the merchant banking arm of J. P. Morgan Chase & Co. This unique financing was selected as Loan of the Year 2011 by IFR Asia for its “triumph over complexity.”
Three different Aditya Birla Group subsidiaries in Thailand, Egypt, and Singapore helped complete the acquisition, where the US$900 million financing was split three ways (each of which was independently structured and syndicated) and was secured with a collateral and guarantor group spread across eight countries.
The financing was split into two US$175 million five-year tranches, one for each of Aditya Birla’s subsidiaries Alexandria Carbon Black and Thai Carbon Black. A third tranche consisted of a US$550 million facility for CCC, which was divided into a US$150 million five-year term loan, a US$325 million seven-year term loan B, and a US$75 million revolver.
The cross-border Shearman & Sterling team on this multijurisdictional transaction included partners Steven Sherman (New York-Finance), Clifford Atkins (London-Finance), Esther Jansen (Frankfurt-Finance), and Bill McCormack (Singapore-Project Development & Finance); counsel Nick Wang (Hong Kong-Project Development & Finance); and associates Sylvia Lee (New York-Finance), Devin Lei (New York-Finance), Noah Stacy (New York-Real Estate), Warda Shazadi (New York-Real Estate), Vincent Seah (Singapore-Project Development & Finance), and Odilo Wallner (Frankfurt-Finance).
Vietnam Capital Markets Deal of the Year
Shearman & Sterling represented the borrower and lead sponsor The AES Corporation (AES) in relation to the project financing for the US$1.95 billion 1240 MW coal-fired Mong Duong 2 IPP in northern Vietnam. Naming the transaction its Vietnam Capital Markets Deal of the Year, IFR Asia called Mong Duong 2 “a lesson in the ability of a carefully structured financing to withstand some severe external shocks,” among them the devaluation of the Vietnamese currency and a financing crisis related to the default of state-owned shipbuilding company Vinashin.
The financing documents for the US$1.46 billion non-recourse debt facilities were signed on July 8, 2011, with financial close occurring on August 24, 2011. AES is providing 51% of the equity in the project, with Posco Power Corporation of South Korea providing 30% and China Investment Corporation providing the remaining 19%. This will be the first independent power producer (IPP) in Vietnam to reach financial close since Phu My 3 in 2003.
The 12 lenders are foreign banks BNP Paribas, Credit Agricole, HSBC, ING, Natixis, Societe Generale, Sumitomo Mitsui Banking Corp., Mizuho Corporate Bank, Standard Chartered, UniCredit, Credit Industriel et Commercial, and DZ Bank. Korea Eximbank, the biggest single provider of direct debt, and Korea Trade Insurance Corporation (K-sure) will provide extended political risk cover.
Mong Duong 2 will be developed as a build-operate-transfer (BOT) project and is the largest private sector power project and the first coal-fired BOT project to close in Vietnam. Construction will start in August and continue for four years. Commercial operation of the whole plant (2 x 620MW) is targeted for June 2015.
The Shearman & Sterling team included Singapore-based Project Development & Finance partner Bill McCormack, working with counsel Scott Baggett and associate Warren Kim, also from the Singapore Project Development & Finance team. Partner Paul Strecker and associate Joseph Tong (both Hong Kong-Mergers & Acquisitions) and partner Patrick Clancy and associate Leona McManus (both London-Finance) were also on the team.