CHEMCHINA RAISES US$20B

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

New Straits Times - - Business -

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

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