Paying tighter pricing than the borrowing it is refinancing, BenQ launched a $159m five-year loan for ESG (Environmental, Social, and Governance). BenQ Materials is a Taiwan-listed electronic parts maker. E. Sun Commercial Bank becomes the lead arranger and bookrunner of the transaction. So far, it covers NT$1.2bn equal to revolving credit tranche A and guarantee tranche B, NT$3.3bn.
Tranche A1 and A2, respectively, is the split of tranche A’s NT$1.2bn and $40m for tranche A2. These two tranches cannot overload to NT$1.2bn as a combined equivalent. Tranche A1 allocation is to pay an interest margin of 55bp over Taibor, including pre-tax interest rate floor of 1.7%. Tranche A2 on the other hand offers a margin of 60bp over TAIFX. While, Tranche B purchases the annual guarantee fee of 50bp.
If the borrowers attempt to meet ESG metrics, the margin on tranches A2 and B will decrease by 1bp. With the same reason, 3bp more is reduced to meet all three ESG criterias. There are many targets to meet the ESG plan. Greenhouse emission intensity, water recycling, and direct waste disposal intensity are some of them. BenQ also includes the percentage of suppliers agreeing to certain corporate social responsibility commitments. Then it must perform high ranking in the Taiwan Stock Exchange’s corporate governance evaluation.
Upfront fee of 8bp is the combination earnings from MLA and NT$900M. Co-arranges of NT$675m-$899m get 5bp fee. 3bp offers managers with NT$450m-$674m. The commitment deadline must be ready on April 22nd this year. A NT$3.3bn five-year loan allocation is to proceed with refinancing and working capital.
MLAB’s 2019 borrowing are E. Sun and Taishin International Bank, they make NT$1.5bn term loan tranche A and tranche B with NT$1.8bn guarantee.
