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Commonwealth Bank and Leighton Holdings form $750 million strategic partnership

1 June 2006

The Commonwealth Bank of Australia has reached agreement with Leighton Holdings Limited to provide a $750 million fully underwritten revolving operating lease facility.

The facility, which includes a substantial initial sale and lease-back component, provides guaranteed funding availability to support the continued expansion of the Leighton plant fleet to cater for expected continued strong demand for contract mining.

"This is a ground breaking transaction for both the Bank and Leighton Holdings," Paul Riordan, Executive General Manager Global Finance Solutions said.

"We’re developing a mutually strategic long term partnership between the world’s largest contract miner and Australia’s largest financial services organisation."

He said the Bank expected to see continued strong growth in the principal commodity sectors of iron ore and coal.

"By utilising the expertise of the Bank’s natural resources, equipment management and structured asset finance teams, the Bank successfully structured this facility to provide significant flexibility and operational efficiencies for Leighton Holdings." Mr Riordan said.

The Bank now adds large value mobile mining equipment to its existing portfolio of rail rolling stock, ships and aircraft under operating leases.

"This transaction is an excellent example of the Bank providing innovative funding solutions to its major institutional customers, and is a model that is able to be replicated in other asset classes," he said.

-ENDS-

 

For more information, contact:

Michael Gleeson
Executive Manager, Media and Issues Management
Commonwealth Bank Communications
Phone: (02) 9378 5965 / Mobile: 0400 096 924

 

APPENDIX A

KEY FEATURES OF THE OPERATING LEASE FACILITY

Value of facility

- Initially A$750m

Pricing

- Commercial-in-confidence

Term of agreement

- Two year "evergreen" revolving facility

Payment

- Common quarterly lease payment dates for all equipment

Equipment

- Facility allows for equipment from a range of manufacturers

- Includes a wide range of mobile mining assets such as:

- off-highway trucks

- dozers

- graders

- excavators

Flexibility

- Voluntary early termination permitted for any unit after 12 months on lease, subject to 3 months notice

- Equipment able to be moved across portfolio of jobs

- Does not impact existing operating practice

Residual value

- Through life residual value curves up to nine years and under different operating scenarios

Accounting treatment

- Treated as an ‘Operating Lease’ and compliant with AIFRS accounting requirements

Maintenance

- Life-cycle major equipment maintenance program as per current operations

 

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