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Mandated lead arrangers BNP Paribas and Société Générale structured a US$6bn financing package to fund Russia’s Norilsk Nickel’s acquisition of Canada’s Lionore Mining International in one of the most high profile deals closed in 2007. The facilities were signed in June.

Among many outstanding attributes, this deal is the largest cross-border acquisition to be made by a Russian company to date, and has helped confirm Norilsk as a major Russian player.

The acquisition has helped Norilsk expand its influence geographically as well as access new technology to improve its mining production from its current and newly acquired assets.

Furthermore it improves the company’s position as one of the largest diversified miners in the world.

Philippe Landry, managing director, structured commodity finance, metals and minerals at Société Générale, remarks: “The structuring and implementation of the facility was not only concluded in a record time of three months after Norilsk Nickel’s initial bid but was a huge success with six banks clamouring to arrange and sub-underwrite in addition to the original MLAs and bookrunners, SG and BNPP, and with oversubscription of 22% by 18 additional banks in the syndicated loan market.”

The financing consists of three tranches: a US$2bn five-year pre-export finance facility, a US$1.5bn three-year dual-tranche unsecured term loan and revolving credit facility, and a US$2.5bn one-year unsecured term loan.

The syndicated facilities, the US$2bn pre-export tranche and the US$1.5bn unsecured portion, proved highly popular in syndication. The US$3.5bn was raised in record time, and was also oversubscribed. The borrower, however, opted not to take the oversubscription.

Margins being paid on the five-year pre-export tranche started at 52.5bp during the first three years, rising to 62.5bp. The US$1.5bn dual three-tranche unsecured facility carries a margin of 60bp.

Société Générale was the facility agent for the syndicated acquisition facilities, and BNP Paribas was the facility agent on the US$2.5bn one-year unsecured term loan.

Joining as mandated lead arrangers during syndication were Bayerische Hypo- und Vereinsbank, Bank of Tokyo-Mitsubishi UFJ (BTMU), Calyon, ING Bank, Natixis and Sumitomo Mitsui Finance. Senior arrangers are Bayerische Landesbank, Dresdner Bank, Cooperatieve Centrale Raiffeisen-Boerenleenbank and Royal Bank of Scotland.

Lead arrangers are BBVA Ireland, Mizuho Corporate Bank, and Scotiabank. Arrangers are DZ Bank, Barclays Bank, HSBC and Sanpaolo IMI. Bank of Montreal, Landesbank Baden-Wurttemberg, Royal Bank of Canada, WestLB, NM Rothschild & Sons and Skandinaviska Enskilda Banken (SEB) joined as managers.

Norilsk Nickel and its subsidiaries is the world’s largest producer of palladium and nickel, as well as a leading producer of platinum and copper. The company also produces a high volume of by-products such as silver, gold, iridium and colbalt.

SG’s Landry concludes: “The transaction headlined a wave of recent huge pre-export finance transactions in Russia and demonstrates a continuing shift in purpose of pre-export finance from merely working capital needs to investment and acquisition needs.”

Deal Information:

 

Borrower:

 

Norilsk Nickel
Mandated lead arrangers: BNP Paribas; Société Générale
Amount: US$6bn
Tenor: 1-5 years
Margin: 52.5-62.5bp
Law firm: Clifford Chance
Date signed: August 2007