Shandong Zhonghua Power Project

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The Shandong China Power Company was created in May 1997 as a joint venture owned by China Light & Power (29.4%), Electricite de France (19.6%), state-owned Shangdong Electric Power (36.6%), and state-owned Shangdong International Trust Investment Co. (14.4%). The equity contribution of China Light and Power was US$168.6 million, while Electricite de France's was US$112.4 million. The joint venture was created to take over Shiheng I, a 600 MW coal fired power plant and to finance, build, operate and transfer after 20 years three new coal-fired plants with a total generating capacity of 2400 MW. The three new power plants are Shiheng II (2x300 MW), Heze (2x300MW), and Liaocheng (2x300MW). Shinheng II had begun its testing stage as of February 1998. The Shandong Zhonghua Power Project was the largest independent power project with foreign investment on the Chinese mainland by 2004. The total project closed financing in May 1998, jointly arranged by Greenwich NatWest, IBJ Asia and SG and involved an offshore commercial loan of US$350 million, a US$288 million loan underwritten by ECGD, and US$822 million in RMB loans. The project was refinanced in 2004. The deal was originally to be a wholly Renminbi refinancing, but because of expected currency movements, the sponsors elected for a refinancing roughly half in US Dollars and half in local currency. In 2003, the Shandong Zhonghua project company had successfully re-financed all of its foreign currency loans into RMB and USD loans. The new loan for the Shandong Zhonghua project company amounted to US$ 1.29 billion with a 20 years tenor (maturing in 2024). Calyon was the financial adviser for the transaction. It was divided into a US$ 560 million tranche, and a RMB 6.6 billion (US$730 million) tranche. The lending structure for the USD tranche was China Construction Bank (US$ 180 million), Bank of China (US$ 160 million), ICBC (US$ 160 million), Agricultural Bank of China (US$ 50 million) and China Merchants Bank (US4 10 million). The lending structure for the RMB tranche was Shandong ITIC (RMB 1,370 million), China Construction Bank (RMB 1,500 million), Bank of China (RMB 1,320 million), ICBC (RMB 1,320 million), Agricultural Bank of China (RMB 410 million) and China Merchants Bank (RMB 150 million). None None