Gunvor Group, a global physical energy commodities trader, has successfully met targets for its US$725m sustainability-linked borrowing base financing and their performance has been subject to third party assurance from PricewaterhouseCoopers. Gunvor says it is the first energy commodities trading company to close a financing in which the interest rate is dependent on the company’s year-on-year improvements in 15 different sustainability criteria. Gunvor will renew the facility, including sustainability improvement criteria, for another year.
“We’re proud to have lived up to the challenge set forth by this innovative financing, which Gunvor created with ING Bank,” said Muriel Schwab, Gunvor Group’s CFO. “Gunvor is already exploring other areas of our operations where we can undertake ‘green’ or ‘sustainability-linked’ financings. There is a lot the trading industry can do in terms of sustainability and the energy transition, and it is a focus of ours at Gunvor.”
To achieve the lower interest rate, Gunvor had to meet different sustainability-related key performance indicators that focused on the ‘environment’, ‘social impact’ and ‘governance’, and specifically addressed areas like reductions in CO2 emissions, waste and water management, improvements to personnel safety at 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.
Per the deal, Gunvor received a discount on its interest rate as sustainability targets were met; had Gunvor underperformed on the sustainability targets, a premium would have been added to the interest rate. This year’s performance results over these sustainability targets were subject to independent assurance from PricewaterhouseCoopers. The same terms apply to the renewal, which provides for the working capital requirements of the company’s Antwerp and Rotterdam refineries.
Related savings from the lower interest rate go to supplement funding for Gunvor Foundation, the company’s not-for-profit entity dedicated to philanthropic giving.
ING also acted as sole coordinator and active bookrunner while maintaining its roles as security agent, facility agent and fronting bank. The banks participating in the facility included:
- ING Belgium, Brussels, Geneva Branch.
- DBS Bank Ltd., London Branch.
- Société Générale.
- Cooperatieve Rabobank U.A.
- ABN Amro Bank N.V.
- CA Indosuez (Switzerland) SA.
- Credit Suisse (Switzerland) Ltd.
- Mizuho Bank Europe N.V.
- Sumitomo Mitsui Trust Bank, Limited (London Branch).
- UniCredit Bank AG.
- KfW IPEX-Bank GmbH.
- MUFG Bank, Ltd.
- Raiffeisen Bank International AG.
- China Construction Bank (Zurich Branch).
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