Milbank Advises on US$1 Billion Financing for Hynix-ST Semiconductor Plant in China
Hynix-ST Among First Foreign-owned Semiconductor Chip Manufacturing Plant to be Financed Predominantly by Chinese Banks
BEIJING/HONG KONG, October 26, 2006 – The international law firm Milbank, Tweed, Hadley & McCloy LLP (“Milbank”) advised Hynix-ST Semiconductor Ltd (“Hynix-ST”) on the recently completed US$1 billion bank debt financing for a semiconductor chip manufacturing plant being constructed in Wuxi, Jiangsu Province. The total construction cost will be approximately US$2 billion.
Hynix-ST is a joint venture between two global leaders in the semiconductor industry, Korea’s Hynix Semiconductor, Inc. (“Hynix”) and Geneva-based STMicroelectronics N.V. Milbank represented Hynix-ST and Hynix in the financing, which consisted of a US$750 million senior syndicated term loan facility co-led by Industrial and Commercial Bank of China (“ICBC”), China Development Bank and Agricultural Bank of China, and a US$250 million junior loan from DBS Bank Ltd.
“This transaction was one of the first limited recourse project financings for a wholly foreign-owned semiconductor chip manufacturing plant in China to have been financed predominantly by Chinese banks, with ICBC, the largest commercial bank in China, playing multiple roles of arranger, co-lead, facility release agent and security agent,” said Young Joon (“YJ”) Kim, the lead Milbank partner on the transaction.
Mr. Kim noted that the transaction required complex security arrangements because of the size of the senior syndicate (20 banks comprising both Chinese and foreign banks), and the presence of senior and junior lenders, resulting in a highly negotiated intercreditor agreement, let alone the United Nations-like negotiation sessions conducted primarily in Chinese, Korean and English, involving multiple translators given the multinational parties involved.
“Milbank assisted Hynix and the joint venture project company from the beginning, from negotiating with ICBC on the lead arranger mandate, to negotiation and documentation of the credit and security agreements in English and Chinese, to the completion of closing conditions and drawdown,” he said.
“The Milbank team, composed of attorneys in our China practice and Project Finance groups based in the Hong Kong and Beijing offices, worked intensively with local counsel and multiple governmental authorities to overcome the many regulatory hurdles in registering the senior and junior security interests in cutting-edge high-technology equipment,” said Desiree Woo, Of Counsel and a senior member of Milbank’s China and Project Finance team. “This was further complicated by the additional regulatory layer of the various Export Processing Zone agencies due to the location of the plant in the Wuxi Export Processing Zone. Our China team is delighted to have been able to help our client bring this process to a successful conclusion.”
About Milbank Asia
Milbank recently opened its Beijing office, has been active in China since the early 1990s and is a global leader in project development and finance practice. The firm was one of the first international law firms to open an office in Hong Kong in 1977. Milbank also has offices in Tokyo and Singapore. With a diversified, pan-Asia practice, Milbank has established itself as one of the leading international law firms in the region. With offices in Asia for nearly 30 years, Milbank has one of the strongest practices in the region, encompassing project finance, private equity/M&A, and acquisition finance, capital markets, restructuring, and transportation finance. Milbank has nearly 40 attorneys resident in its Asia offices, qualified to practice New York and English law.
About Milbank
Milbank, Tweed, Hadley & McCloy LLP is a preeminent global law firm that for more than 140 years has provided innovative legal solutions in many of the world’s largest, most complex, “first-ever” corporate transactions and litigation. Our transactional expertise includes capital markets, corporate finance and transactions, project finance, acquisition finance, and other major fields of law practice. Milbank litigation teams resolve disputes involving mergers and acquisitions, proxy battles, financings and securities offerings, intellectual property, white collar crime, and corporate restructurings, among others. Our clients range from prominent multinational financial, industrial and commercial enterprises to governments, institutions and individuals. The Firm is headquartered in New York, with offices in Los Angeles, Washington, DC, London, Frankfurt, Munich, Tokyo, Hong Kong, Singapore and Beijing.