China Huaneng Group’s acquisition of 50% of OzGen
Mallesons advised China Huaneng Group (CHG) on all aspects of the US$227 million acquisition of a 50% share of OzGen, the holding company for InterGen’s Australian power generation assets. OzGen owns a 50% indirect interest in Callide and a 53.7% interest in Millmerran, two coal-fired supercritical power stations in Queensland, Australia. This was the first off-shore investment in a major power generating asset by a state-owned PRC power enterprise. Mallesons advised on all aspects of CHG’s bid including negotiation of the sale documentation and shareholders agreement. The deal will enhance CHG’s bargaining power in coal purchasing by striking a strategic partnership with a major foreign coal supplier. Mallesons was able to add value to the transaction by guiding the client through a liberalised trading market for electricity and the relevant regulatory and contract regime, a complex investment structure with the underlying assets project financed in a separate joint venture and partnership and complex governance arrangements involving several offshore entities in different jurisdictions.
BHP Billiton's China iron ore deal - the Wheelarra Joint Venture
This is one of Australia's biggest export contracts - a $US9 billion deal to supply iron ore into China for the next 25 years. One of the special features of the deal was that BHP Billiton brought together four of China's largest steel makers into a single joint venture and series of selling arrangements. A deal of this kind with this number of parties has not been done before in China. Under the terms of a joint venture that underpins the deal, the four Chinese steel makers, Wuhan Iron and Steel Corp , Maanshan Iron and Steel Company, Jiangsu Shagang Group and Tangshan Iron and Steel (group) Co, will take a 40 per cent stake in a sublease of BHP Billiton's Jimblebar mine near Newman. The sublease covers about 175 million tones of the Jimblebar resource known as Wheelarra. BHP Billiton's existing Japanese partners in the Newman joint venture, CI Minerals Australia and Mitsui, will take 4.8 per cent and 4.2 per cent of the sublease respectively, leaving BHP Billiton with a controlling 51 per cent. The Wheelarra joint venture will supply BHP Billiton's Mt Newman operation with ore, which would then be blended with ore from Mt Whaleback and other satellite deposits and sold to the Chinese steel makers under long term commercial arrangements. The joint venture will secure sales to the Chinese steel makers of about 12 million tones a year. Acting as lawyers for BHP Billiton, Mallesons provided strategic advice on how to structure the joint venture and selling arrangements. Mallesons worked closely with BHP Billiton's in-house legal team in the preparation and review of 27 project documents over the past year. Mallesons also played a key role in the negotiation of the documentation here and in China. The deal ensures that BHP Billiton will capitalise on soaring Chinese demand for Australian mineral commodities.
The US$355 million 210MW power station project financing involved an innovative sponsor support structure to overcome the non-availability of terrorism insurance following September 11. Mallesons acted as English law counsel to the offshore trustee, Deutsche Bank, in a complex security structure designed to overcome local law restrictions on the taking of security interests in the Philippines. Mallesons assisted the parties to balance the needs of the financiers and the sponsors against the protections required to preserve the position of the trustee, including in respect of third parties under the project documents. The result was achieved through close cooperation with the client and legal counsel to the sponsors and the financiers.
Mallesons acted for Mitsubishi in the financing of the 1,400MW Map Ta Phut Power plant. We advised Mitsubishi on agreements between group entities and the senior lenders including security arrangements and their role in the onshore and offshore security structure. The matter is one of the largest project financings in Thailand to date, and is one of the few projects in Asia to reach financial close last year. Mallesons protected the client from exposure imposed under Thai law which would have obliged the client to take a more active role in a security structure than would normally be the case. Mallesons worked with both lenders and sponsors and respective counsel to achieve a sensible and workable outcome.
“This Australian firm has built upon its construction practice and expanded its China capability, attracting more domestic clients to it projects, energy and infrastructure group.”
Chambers Asia 2008