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Deal Analysis - Erdenet, Mongolia
23 June 2009
The first big ‘new money’metals deal for an emerging market producer in 2009 has been arranged by Rabobank. Jonathan Bell examines the background and detail of a classic deal that breaks the deadlock of a metals commodity banking market wrapped up in restructurings.
Read more:
[Rabobank]
[Ocean Partners]
[Banco Espirito Santo]
[Denton Wilde Sapte]
[Mongolia copper]
[copper concentrate]
[copper commodity finance]
[Erdenet]
[Mongolia]
Commodity banking and new metals financings in particular, may have been severely knocked off-kilter by the global economic recession, but the recent deal for Mongolia’s Erdenet Mining Corporation (Erdenet), led principally by trader/offtaker Ocean Partners UK (OP) and Rabobank International together with Banco Espirito Santo (BES), shows that the sector has tremendous resilience with experienced arrangers ready and able to support consistent producers with secure export contracts.
The deal in question is a one-year, $55 million trader-led pre-payment financing for Mongolia’s Erdenet copper mine, located some 400 kilometers north-west of the capital Ulaanbaatar. The deal is a club arrangement, with Rabobank acting as coordinating arranger and providing $42 million of the funding. Banco Espirito Santo (BES) is providing the remaining $13 million. OP is the borrower of record, which onlends to Erdenet. As such, there is a pass-through risk, with performance risk being taken on Erdenet to produce...
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