CNPC (HK) makes loan market debut through dual-tranche facility

CNPC (HK) is preparing to tap a dual-tranche facility to raise $100 million that will be utilised for capital expenditure.

Hong Kong-listed CNPC (HK) is preparing to tap a dual-tranche facility to raise $100 million that will be utilised for capital expenditure. The facility marks the company's debut in the loan markets and pays a margin of 40bp over Libor. Sumitomo Mitsui Banking Corporation (SMBC) is the sole mandated arranger.

Tranche A of the facility is a $40 million term loan while Tranche B consists of a $60 million revolving credit. Tranche B pays commitment fees of 25bp. Management fees for Tranche A are a flat 52.5bp for leads committing $10 million and managers committing between $5 million to $9 million will receive 48bp. All-in is 57.5bp for leads and 56bp for managers.

General syndication was launched last Friday afternoon following the close of the sub-underwriting stage. Agricultural Bank of China (Hong Kong), Bank of China (Hong Kong) and China Construction Bank (Hong Kong) have joined as sub-underwriters.

CNPC (HK), this year, has acquired assets in Central Asia and the Middle East. In January, the company through its wholly-owned subsidiary, Fortunemate Assets, entered into sale and purchase agreement (SPA) to buy a 15% stake in Salyan Oil from European Bank for Reconstruction and Development (EBRD) for a sum of $26 million. CNPC (HK)'s affiliate, China National Oil and Gas Exploration and Development Corporation (CNODC) entered into a separate SPA with EBRD to buy the latter's remaining 15% stake in Salyan Oil for $26 million. Salyan Oil serves as a cost centre for all participants carrying out petroleum operations in Azerbaijan.

In April, CNPC (HK) entered into an SPA with Mazoon Petrogas SAOC, to buy half of the latter's 100% stake in Mazoon Petrogas (BVI) for a sum of $25 million. Mazoon Petrogas SOAC operates oil-fields in Oman.

For the year ended 2001CNPC (HK) reported net profits of HK$457.37 million, down 32.7% over the previous year. Turnover for 2001 was also lower 17.46% at HK1.48 billion. CNPC is a 58% subsidiary of China National Petroleum Corporation (CNPC), one of the two largest petroleum corporation in Mainland China, the other being China Petroleum and Chemical Corporation (Sinopec).

CNPC is primarily engaged in the exploration and development, production, storage and transport, marketing, and comprehensive utilization of oil and natural gas resources. CNPC is dominant in upstream operations while Sinopec dominates the mid-stream and downstream operations.