China National Chemical Corp., or ChemChina, is seeking a loan to complete its acquisition transaction with Swiss agrochemicals maker Syngenta. Earlier this month, the two companies had already reached a deal on a $43 billion takeover.
ChemChina is asking bankers for more than $35 billion worth of loans to complete the acquisition. According to The Wall Street Journal, the syndicated loans is led by HSBC Holdings PLC and China Citic Bank International Ltd. as the company's advisors on the acquisition. ChemChina is reaching out to a clutch of global and Chinese banks for a lending package set to be completed by April.
A $20 billion non-recourse loan for ChemChina is already launched, split between $15 billion of bridge loans to support the offer and another $5 billion of facilities to backstop Syngenta's existing debts that are subject to change of control clauses, as reported by Reuters. The financing has been launched to existing lenders to Syngenta and ChemChina. Lenders are asked to allocate $1.25 billion each to the financing.
Some international banks have also reportedly agreed to give out loans to the Chinese company into the bridge-loan package. Besides HSCB Holdings, other international banks such as Credit Suisse Group AG, Rabobank Group, and UniCredit SpA are already involved as they intended to invite other European banks to join.
Aside from the non-recourse loan, ChemChina also hired China Citic Bank International Ltd. to arrange a $15 billion loan facility, according to Bloomberg, citing an unspecified source. The $15 billion facility will likely be syndicated in Asia as terms are being finalized, as ChemChina strive to secure funding from other Chinese entities to join its consortium.
Global banks and Chinese investors have been eager to fund Chinese companies, especially state-owned companies, on their aim to takeover western companies. ChemChina's acquisition deal with Syngenta is the biggest purchase ever made by a Chinese company. Previously, ChemChina also acquired German machinery manufacturer KraussMaffei Group for $1 billion and also Italian tire company Pirelli's stake. The transaction, along with other Chinese companies maneuver to purchase U.S-based or Europe-based companies, reflects China's ambition to expand its business in global markets and acquire advanced technology in western countries.
After months of negotiating and competing with other companies, ChemChina finally reached an acquisition deal of $43 billion with Syngenta, or $465 a share plus a special dividend to be paid immediately. Now the Chinese chemical maker is seeking loans from banks to complete the transaction on a lending package to be completed on April.
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