According to anonymous sources familiar with the transaction, the Bank of China and Morgan Stanley have put together a package of loans worth US$7 billion to be given to Shuanghui Int'l's bid to acquire US pork producer Smithfield Foods.
The record financing for the Chinese company is said to amount to US$7.1 billion, which includes assumption of net debt. This was detailed in an announcement last Wednesday, but no further information was provided by both companies.
The sources said that the Bank of China has loaned up to US$4 billion in financing through a five year loan to Shuanghui. Morgan Stanley would add US$3 billion to the term loan. Both banks would syndicate the loan as well as sell down the amount.
Currently, Smithfield has a gross debt outstanding of US$3.45 billion which is broken into both corporate and high yield debt according to data obtained by Thomson Reuters. The information culled also indicates that the company has US$1 billion in cash and short term investments as liquid assets.
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