China's biggest chemicals trader, China National Chemicals Import & Export Corporation (Sinochem), is preparing to tap a $150 milion syndicated loan being raised by a US entity, Sinochem American Capital Corporation. Sinochem Beijing is the guarantor for the loan, according to sources close to the deal. ABN AMRO, Bank of China, Bank of Communications and Standard Chartered are the arrangers for the deal.
General syndication for the three-year bullet transaction is underway and is expected to close today (Friday). A few banks have already committed to the facility, which is likely to be over-subscribed. Arrangers will receive an all-in of 65bp for commitments of $15 million. Co-arrangers are being offered 63.5bp all-in for commitments of $9 million to $14 million, while senior managers will receive 62bp all-in for commitments of $3 million to $8 million. Additonally, management fees of 45bp, 40.5bp and 36bp will be paid to arrangers, co-arrangers and senior managers respectively.
State-owned Sinochem will utilize the proceeds from the loan for general working capital purposes and partial refinancing of existing borrowings. Sinochem's core businesses include the import and export of oil, fertilizers, rubber, plastics and chemicals.
Earlier this year in January, Sinochem signed a deal with Norwegian company Petroleum Geo Services (PGS) to buy the latter's Atlantis natural gas unit for $215 million. PGS provides seismic data and associated data management solutions that are used by oil and gas companies in the exploration for new reserves, the development of existing reservoirs, and the management of producing oil and gas fields.
PGS is in the middle of discussions for a proposed $1bn merger with Veritas DGC Inc. The merger is conditional on the sale of Atlantis to Sinochem. Atlantis owns rights to natural gas fields in United Arab Emirates, Tunisia and Oman and produces 20,000 barrels of oil a day in Tunisia. ABN AMRO acted as financial adviser to Sinochem on the deal, while JPMorgan advised PGS. The acquisition is yet to be completed as it is pending approval from regulatory authorities in the Middle East.
In March this year, Sinochem was one of the two Chinese oil firms to renew an annual contract to buy 34,000 barrels of crude oil a day from Oman. Sinochem is also reportedly in talks with China's largest oil refiner, Sinopec, to acquire more crude oil production assets in the Middle East.
Sinochem has been rumoured for some time to be preparing to list in Hong Kong and is in talks with investment banks for the share sale.