CHEMCHINA RAISES US$20B

Firm seeking to bring in more equity investors in bid to reduce hefty debt burden

HONG KONG

CHEMCHINA has raised US$20 billion (RM85.6 billion) in perpetual bonds and preferred shares to finance its acquisition of Swiss seeds maker Syngenta, according to a regulatory filing by the state-owned company.

ChemChina has restructured the financing of its Syngenta deal to take on more equity and reduce its short-term debt burden, but will still have nearly US$20 billion in loans to refinance within 18 months, the filing shows.

Bank of China (BoC) has invested US$10 billion via a perpetual bond, making the Chinese lender the largest financier in the US$44 billion deal, according to the May 18 filing, which also shows state-owned asset manager China Reform Holdings Corp Ltd has provided US$7 billion via a perpetual bond.

China’s Industrial Bank Co Ltd has invested US$1 billion through the same means, while Morgan Stanley has provided US$2 billion via convertible preferred shares.

The ambitious takeover is nearing the finish line after regulators last month granted the final approvals and as more than 80 per cent of Syngenta shareholders voted in favour.

The deal gives China a portfolio of chemicals and patent-protected seeds to improve agricultural output, but has also left ChemChina facing a hefty debt burden which it has been seeking to reduce by bringing in equity investors and replacing short-term loans with longer-term debt.

ChemChina last year arranged US$32.9 billion in bridge loans from more than 20 Chinese, European and Asian lenders, stoking concern over its leverage. The company has been trying to increase the ratio of equity financing and last year raised US$5 billion from a fund. Bloomberg