Gunvor Group closed an innovative $745 million secured borrowing base facility that includes performance commitments related to Gunvor’s sustainability targets.
Gunvor is the first energy commodities trading company to close a financing in which the interest rate will be dependent on the company’s year-on-year improvements in areas such as transparency, governance and the environment.
The facility, originally launched at $625 million in 2012, was a renewal to provide for the working capital requirements of the company’s Antwerp and Rotterdam refineries. It was significantly oversubscribed to $745 million through the addition of new lenders.
The facility was arranged by ING Bank, who acted as sole coordinator and active bookrunner while maintaining its roles as security agent, facility agent and fronting bank. The structure for the sustainability targets was created by Gunvor in collaboration with ING Bank as the sustainability coordinator and supported by a consortium of banks.
Gunvor will receive a discount on its interest rate if the sustainability targets have been met and vice-versa; if Gunvor underperforms on the sustainability targets, a premium will be added to the interest rate. This initiative will serve as a test run for a more expanded future program for the company’s financings.
“By partnering with our banks to set goals that achieve substantive results, we are demonstrating the seriousness with which we integrate sustainability into our business,” said Jacques Erni, Gunvor Group CFO.
The sustainability targets are focused on the “environment”, “social impact” and “governance” and specifically address areas like reductions in CO2 emissions, waste and water management, improvements to personnel safety at the refineries, transparency reporting related to feedstock origination (within the parameters of the company’s support for the Extractive Industries Transparency Initiative, or EITI) and others.
The banks participating in the facility are ING Belgium, DBS Bank, London Branch; Société Générale, Rabobank, ABN Amro Bank, CA Indosuez, Credit Suisse, Mizuho Bank Europe, Nedbank, Sumitomo Mitsui Trust Bank, UniCredit Bank, KfW IPEX-Bank, MUFG Bank and Raiffeisen Bank International.
Gunvor Group is one of the world’s largest independent commodities trading houses.