BEST ENERGY FINANCING: Zhonghua powers ahead
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BANKING

BEST ENERGY FINANCING: Zhonghua powers ahead

Deals of the Year


Project: Shandong Zhonghua Power
Date: May 1998
Amount: $2.2 billion
Global arrangers: Greenwich NatWest, IBJ Asia, Société Générale


At $2.2 billion, the Shandong Zhonghua power financing, signed in May, is the largest independent power project deal in China to be funded on a limited-recourse project finance basis.

The project, 70%-funded ($1.5 billion) by limited-recourse debt financing with the rest made up of equity, is sponsored by Shandong Electric Power Group (37%), Shandong International Trust (14%), China Energy Investment (29%), and Electricité de France (20%).

The $1.5 billion debt financing was raised in three ways: a $350 million, 12-year offshore commercial loan from a group of arrangers including Greenwich Natwest, IBJ Asia Limited and Société Générale; a 17-year export credit facility of $312 million; and a Rmb6.8 billion ($822 million) 15-year loan from China Construction Bank and Shandong International Trust & Investment Corporation.

“It was the first time in a Chinese power deal that export credit and both offshore and onshore commercial lending were used in combination for a limited-recourse financing,” says Brian Allen, head of project finance and syndications at HSBC Investment Bank Asia, who was financial adviser for the deal.


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