ADB: innovative loan gas distribution projects China
ADB Launches Innovative ‘B Loan’ to Support Natural Gas Distribution in People’s Republic of China
Manila, Philippines – ADB and China Gas Holdings Limited are partnering with 12 commercial banks on a $75 million loan facility to finance a series of new natural gas distribution projects in the People’s Republic of China.
“This is the first natural gas distribution network project supported by ADB, as well as ADB’s first long-term local currency debt financing arrangement in the PRC,” said Robert Bestani, a Director General in ADB’s Private Sector Operations Department.
The loan facility is part of ADB’s about US$150 million financing package to China Gas Group, which includes an equity investment of up to US$25 million as well as an ADB-provided loan, called an “A Loan,” of $50 million and a commercial bank-provided loan, called a “B Loan” of $75 million. Through the “B Loan” structure, the participating commercial banks can share with ADB the benefit from ADB’s preferred creditor status.
The loan will be used to finance a series of new natural gas distribution infrastructure projects in municipalities through joint ventures with local municipal governments and state-owned enterprises across the country.
“We are pleased that China Gas has now concluded the US$150 million financing supported by ADB and so many reputable international banks,” said Mr. Liu Ming Hui, Managing Director of China Gas. “We believe, apart from our strong business performance, our good corporate governance and environmental protection and social betterment are also what impressed the banking community. With a strengthened capital foundation and greater financing flexibility, China Gas is poised to capture a larger market share and also contribute to China’s energy reform.”
The project is in line with PRC Government policy to encourage private sector participation in the natural gas distribution sector. It will also help improve the environment by promoting the use of natural gas and help reduce pollution from households and small industries.
“ADB’s participation plays an important role,” said Mr. Bestani. “Not only does it mobilize additional funds from international banks, it also attracts private sector investors by improving corporate governance and enhancing the institutional capacity of China Gas Group over the long term.”
Institutions which joined this transaction include Mandated Lead Arrangers; The Royal Bank of Scotland plc, Bank of China; Bank of China (Hong Kong) Limited; The Royal Bank of Scotland plc; Lead Arrangers; CITIC Ka Wah Bank Limited; Overseas-Chinese Banking Corporation Limited; Barclays Capital; Export Development Canada; Fortis Bank S.A./N.V.; Kookmin Bank; Korea Development Bank,; Korea Exchange Bank; and Mizuho Corporate Bank, Ltd.