Allen & Overy and Mayer Brown advised on Chinachem Group and ESR Group’s HKD8.8 billion (USD1.13 billion) joint loan, the largest green loan in Hong Kong this year.
The five-year green loan will be used for the construction of the Kwai Chung Cold Storage Logistics Centre, set to be the largest such facility in Hong Kong in the past 20 years.
Chinachem and ESR must follow the green loan principles issued by the Loan Market Association and the Asia-Pacific Loan Market Association to ensure that the funds will be directed to environmentally friendly projects.
A&O partner Roger Lui acted as legal adviser to Chinachem and ESR while Mayer Brown partner Jasmine Chiu acted for the lenders, including Sumitomo Mitsui Banking Corporation, United Overseas Bank, Oversea-Chinese Banking Corporation, Industrial and Commercial Bank of China (Asia), Bank of East Asia and China CITIC Bank.
This green loan has a unique structure as it is split into two tranches, said A&O.
Chinachem provided a corporate guarantee to its relationship banks in one tranche, obtaining a lower interest margin. This reduced the debt burden of the project, and benefited both the sponsors and lenders without guarantees.