Item 1.01 Entry into a Material Definitive Agreement.
On September 27, 2022, Microvast Power Systems Co. Ltd. (the “Borrower”) a wholly-owned indirect subsidiary of Microvast Holdings, Inc. (the “Registrant”), entered into a fixed asset syndicated loan agreement (the “Syndicated Loan Agreement”) with several banks and other financial institutions in China, including Bank of China Limited Huzhou Branch as the lead bank (the “Lead Bank”), China Construction Bank Huzhou Branch as the joint lead bank (the “Joint Lead Bank”) and Huzhou Bank Co. and China Zheshang Bank Huzhou Branch (collectively with the Lead Bank and the Joint Lead Bank, the “Lenders”).
The Syndicated Loan Agreement provides for a project loan of up to RMB 800.0 million (approximately USD $111.1 million at the current exchange rate) at a floating interest rate equal to the lending rate published by the National Interbank Funding Center plus 115 basis points. The availability period for the withdrawal of funds is September 27, 2022 through June 9, 2023. The initial interest rate is anticipated to be approximately 4.8% per annum.
The terms and conditions of the Syndicated Loan Agreement require the Borrower to repay the principal amount drawn on a specified schedule, such that all outstanding amounts will be repaid as set forth in the table below. The loan proceeds may only be used for expenditures related to the ongoing battery cell, module and pack manufacturing capacity expansion project at the Borrower’s facility in Huzhou, China.
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| SYNDICATED LOAN AGREEMENT |
| Amount Available For Withdrawal | Repayment Date | Repayment Amount |
| RMB 800 million | June 10, 2023 | RMB 30 million |
| December 10, 2023 | RMB 70 million |
| June 10, 2024 | RMB 100 million |
| December 10, 2024 | RMB 100 million |
| June 10, 2025 | RMB 100 million |
| December 10, 2025 | RMB 100 million |
| June 10, 2026 | RMB 150 million |
| December 10, 2026 | RMB 150 million |
The Syndicated Loan Agreement contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breach of representations and warranties, covenant defaults, insolvency and change of control. If such an event occurs, the Lenders are entitled to take various actions, including the unconditional right to accelerate the amounts due under the Syndicated Loan Agreement and all other actions that a secured creditor is permitted to take following a default. The Syndicated Loan Agreement is secured by the land and buildings at the Borrower’s manufacturing facility in Huzhou, China.
In addition, the following are conditions precedent to the Borrower’s ability to make withdrawals under the Syndicated Loan Agreement: (i) perfection of security interest under the security documents; (ii) evidence that the Borrower has self-funded at least RMB 500.0 million into the project; (iii) obtaining all permits for the construction project; and (iv) issuance of a commitment letter by Huzhou SaiYuan Equity Investment Partnership Limited (“SaiYuan”) agreeing to restructure the maturity of the Borrower’s outstanding RMB 500.0 million convertible bonds and subordinating a portion of such repayments to the Syndicated Loan Agreement.
On September 27, 2022, in connection with the above, SaiYuan issued a commitment letter agreeing to restructure the maturity of the Borrower’s outstanding RMB 500.0 million convertible bonds as follows: (i) RMB 100.0 million will be repaid, together with interest accrued on or before November 10, 2022, (ii) RMB 100.0 million will be repaid, together with interest accrued, on or before December 31, 2022, and (iii) the remaining RMB 300.0 million will be repaid, together with interest accrued, on or before January 31, 2027. If the Borrower fails to make the foregoing repayments on or before the due date, the applicable interest rate will be increased to 12% following the applicable due date. The remaining terms and conditions of the convertible bonds are unchanged.
The previous SaiYuan repayment schedule is described in Note 9 — Bonds Payable to the Company’s most recent quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on August 11, 2022. The table is reproduced below, together with the new maturity dates and repayment amounts.
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| SAIYUAN CONVERTIBLE BONDS |
Issuance
Date | Subscribed
Amount | Original
Maturity
Date | Original
Repayment
Amount | New
Maturity
Date | New
Repayment
Amount | Annual
Interest
Rate |
| February 1, 2019 | RMB 200 million | June 30, 2023 | RMB 200 million | November 10, 2022 | RMB 100 million | 3% - 4% |
| December 31, 2022 | RMB 100 million |
| December 31, 2018 | RMB 200 million | April 28, 2024 | RMB 100 million | January 31, 2027 | RMB 300 million | 0% - 4% |
| July 11, 2024 | RMB 50 million |
| October 1, 2024 | RMB 50 million |
| January 1, 2020 | RMB 100 million | April 13, 2026 | RMB 100 million | 3% - 4% |
Following receipt of the SaiYuan commitment letter, the Borrower believes all conditions precedent to the Borrower’s ability to make withdrawals under the Syndicated Loan Agreement have been satisfied.
The foregoing description of the Syndicated Loan Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to, and should be read in conjunction with, the complete text of the Syndicated Loan Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.