1. Overview and significance of the case
We advised a client in connection with the development of Korea’s largest hyperscale data center (120MW) in Incheon, which is being developed with a syndicated loan from overseas lenders in the amount of KRW 440 billion.
Despite the challenging environment for PF loans in Korea, several domestic and overseas lenders expressed their intention to participate in this PF project as it is a hyperscale data center development in the metropolitan area, various approvals have been completed in advance, and global companies are the actual user of the data center. Accordingly, we advised the domestic and overseas lenders on all aspects of the PF loan agreement and successfully completed the procurement of the loan.
In particular, as the PF loan agreement for this project involved not only domestic lenders but also lenders consisting of overseas financial institutions, White & Case LLP, a global law firm, provided advice for overseas lenders, and the contents applicable to overseas lenders were reflected and reviewed at the same time. The borrower company, a joint venture of domestic and overseas companies, was also advised by Milbank LLP, a global law firm, and Bae & Kim LLP in Korea. The procurement of funds was completed by coordinating the opinions of each law firm, preparing and concluding loan agreements and other agreements, and providing legal advice under the supervision and leadership of Barun Law.
2. Specificity of PF loan agreements related to data centers
In the case of commercial data centers in Korea, there is a risk of licensing and complaints, and especially in the case of data centers in the metropolitan area, there are problems such as electricity use and power intake. However, this data center does not have such problems, and the risks were hedged to a large extent. For instance, SK ecoplant Co., Ltd. is participating as a shareholder in the joint venture, and the use contract upon completion had been already executed.
However, there were various issues that needed to be reviewed and coordinated, such as the nature of the joint venture, the participation of overseas financial institutions, the reflection of overseas regulations such as the EU in domestic loan agreements, the establishment of collateral for data center facilities, and the establishment and validity of each collateral.
3. Our role
Our attorneys (specifically, Hwang Duk-Jin, Woo Hyun-soo, Ryu Kim, Lee Hye-Rin, Seo Ho-Seok, Kelly Choi, and Lee Si-Yoon) discussed and coordinated the requests of each of the above domestic and foreign lenders, the requests of overseas law firms such as White & Case, and the requests of the borrower, and as a result, successfully finalized the PF loan agreement worth approximately KRW 440 billion and completed the procurement project.
This data center is not only the largest data center in Korea to date, but it is also expected that the center will be used by global companies as a major user. This project is expected to be a reference for overseas financial institutions to invest in domestic data centers, with overseas financial institutions participating as lenders.