A financing solution that raised the client’s credibility and traction in the competitive telecoms market
PT Hauwei Tech Investment is a subsidiary of Huawei Technologies (HWI), an Indonesia-based global leader of ICT solutions. The company’s telecom network equipment, IT products and solutions and smart devices are used in 170 countries. Huawei was ranked 228th in the Global Fortune 500 in 2014, based on revenues.
Deutsche Bank was involved in the first part of the medium term financing. A total facility of USD 30m with a tenor of three years was secured by issuance of promissory notes from the buyer/obligor, resulting in non-recourse to the seller.
To cover the credit risk of the obligor, Deutsche Bank obtained a corporate guarantee from the obligor’s parent. In addition, the exposure was secured by credit insurance cover to the extent of 90% of each promissory note discounted.
A unique element of this transaction was that the underlying sale transaction occurred under Indonesian law, the financing was structured under Singapore law and the credit cover through insurance was under Chinese law. This transaction was the winner of one of Treasury Today magazine’s Adam Smith Awards.
Benefits for the client
The well-structured bridge finance solution allowed the seller to clinch its selling proposition to its client to eliminate competition. This was important to the client given the obligor wanted longer-term funding. Moreover, organising long-tenor financing without a bridging medium-term financing offer would be difficult.
HWI was able to provide a financing solution to its buyer while avoiding taking any risk onto its own books, including performance risk of its equipment. The deal raised Huawei’s credibility and increased its traction in the highly competitive telecoms market.
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