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Joint Financing

Product Brief : 
Joint Financing in ICBC Indonesia is divided into 3 categories:
1.Syndicated Loan: is a loan extended to one Debtor/project by a group or syndicate of Banks/non-Bank financial institutions based on one same Credit Agreement.

2.Club Deal: is a loan extended to one Debtor/project by several Banks in which each of the Bank has a bilateral Credit Agreement with the Debtor. However, a Club Deal has an Agreement which governs security sharing.

3.Risk participation transaction is a type of transaction whereby the Grantor who is a direct creditor of the Debtor, entered into an agreement with Participant Bank where Participant Bank is willing to bear part or all of credit risk of Debtor without involving Participant Bank into the legal relationship directly both toward the credit facility and toward the Debtor.
●Funded Risk Participation: Participant Bank funds facility that became the underlying of risk participation by paying principal amount of facility to the Grantor equal to portion of participation agreed by Participant Bank and Grantor.
●Unfunded Risk Participation: Participant Bank does not fund facility that became the underlying of risk participation directly, however Participant Bank provides a guarantee of payment on Debtor’s obligation if the related Debtor undergo a default. In this scheme, Participant Bank receives a certain amount of fee on the risk participation transaction.

Opening Terms:
The customer needs to provide the Bank the related Legal documents including project licenses, Feasibility studies of the project, the Calculation documents of: Investment needs, business cycle, repayment capability, financial projection, and existing financing amount from other institutions. After Bank credit approval process is approved, the customer shall sign the Offering Letter and Credit Agreement. The required collateral shall be binded first prior drawdown.

Features and Advantages:
●Syndicated Loan or Club Deal may be granted as a working capital loan, investment loan, trade finance, and/or other loans stated in the credit approval.
●Facility tenor, Repayment Method for Syndicated Loan or Club Deal shall be determined based on the facility scheme given to the Debtor and refer to each policy which stipulates that facility.
●The parties in a Syndicated Loan transaction are usually:  Arranger, Participating Banks, Underwriter, Agent, Security Agent, Escrow Agent.

Operation Guide:
For each of withdrawal, Debtor must provide: Written notification, Progress Report, Promissory Note which stated amount and tenor of the withdrawal including date of repayment and / or other required document as per stipulated in credit approval. Other documents in the form of Purchase Order and / or invoices will be required to be fulfilled by the Debtor on a case by case.
Repayment Method:
1.Straight Line Method: paid in several installments with equal amount of principal installment until the maturity date of the facility.
2.Step-up Payment method: paid in several installments with smaller amount of principal installment at the earlier period and gradually increasing in the following period in accordance with the credit approval.
3.Balloon Payment method: paid in several installments with relatively small amount of principal installment as per credit approval and all remaining of the loan principal is paid off as the last payment at the maturity date of the facility.
4.Other repayment methods as per credit approval.

Common Problems:
Bank may participate in Syndicated Loan and Club Deal which are offered in two types of market as follows:
●Primary Market whereby the initial credit offering is conducted before credit agreement is signed and/or before disbursement.
●Secondary Market whereby the credit offering is conducted after the signing of credit agreement or disbursement or when a participating Bank/non-Bank financial institution offers its portion of participation to be handed over.

*Terms and Conditions apply.