In separate ECA financing transactions for its two new landmark power stations, South Africa’s Eskom closed financing arrangements for €1.185bn with a consortium of five French banks.
These fixed interest rate loans, covered by Coface, the French export credit agency, will be used to fund part of the eligible foreign content of Eskom’s Medupi and Kusile power stations’ turbine contracts with Alstom S & E Africa.
The five French banks contributed as follows to the Coface-covered loan as lenders; BNP Paribas (36.72%), Crédit Agricole (21.09%), Société Générale (21.09%), Natixis (10.55%) and CIC (10.55%).
BNP Paribas acted as structuring bank, sole mandated lead arranger, documentation bank and Coface agent.
The loan is repayable over 12 years after the commissioning of the relevant units for both power stations.
Eskom has embarked on a massive capacity expansion programme in order to meet an increase in demand, and to confront the challenges of an existing ageing transmission and generation system.
With a capacity of 4,800 MW each, the Medupi and Kusile power plants are the backbone of Eskom’s strategy to secure future power generation, and would, when commissioned, represent nearly 20% of the total installed capacity in the country. Both Medupi and Kusile are super-critical plants resulting in improved efficiency.
BNP Paribas was selected as the structuring bank and the sole mandated lead arranger as a result of its “aggressive pricing, strong appetite and impressive export finance credentials”, says Gérard Lagouarde, head of BNP Paribas export finance Africa & Middle-East.
“BNP Paribas was able to secure an approval from the French authorities to cover on a corporate risk basis, a €1.185bn financing over 17 years door-to-door, including the funding of Coface premiums and IDC, and to refinance part of the contracts already paid,” Lagouarde continues.
“These highly visible transactions are of great importance as they contribute, by supporting these major projects, in further reinforcing BNP Paribas’ close relationship with our good client Alstom, while confirming the bank as one of Eskom’s international core banks. These are the largest Coface-supported deals for a South African counterparty in decades,” says Amel Ouarti, vice-president, BNP Paribas export finance Africa & Middle-East.
“We trust these export finance transactions will pave the way for the company’s and other South African parastatals upcoming investments in which export finance will certainly play a major role,” Ouarti adds.
Eskom’s finance director, Paul O’ Flaherty notes that: “The success of this transaction in the midst of ongoing difficult international financial market conditions demonstrates the critical role that ECAs play in supporting their economies. ECA-backed financing will certainly continue to be a critical component of our funding plan.”
Borrower: Eskom Holdings
Mandated lead arranger: BNP Paribas
Co-lead arrangers: Société Générale, Crédit Agricole CIB (formerly Calyon), Natixis, CIC
Law firms: Allen & Overy; White & Case; Edward Nathan Sonnenbergs
Tenor: Medupi facility: 4-year disbursements & 12-year repayment; Kusile facility: 5-year disbursement & 12-year repayment
Date signed: December 23, 2009