ChemChina has raised US$20 billion mainly in perpetual bonds to finance its purchase of Swiss seeds firm Syngenta, with Bank of China becoming the single largest investor providing half of that funding, Reuters reports, citing a regulatory filing.
State-owned ChemChina, which took on short-term loans for the US$44 billion acquisition, is restructuring the financing mix to reduce its debt burden by including more equity but will still have nearly US$20 billion in loans to refinance within 18 months, the filing by ChemChina shows.
The move comes as ChemChina has accelerated talks with state rival Sinochem to create the world’s biggest industrial chemicals firm, a deal that could further help streamline ChemChina’s debt, according to Reuters.
Bank of China (BoC) has invested US$10 billion via a perpetual bond, according to the May 18 US Securities and Exchange Commission filing, which also shows that Chinese state-owned asset manager China Reform Holdings Corp. Ltd. has provided US$7 billion via a perpetual bond.
Both deals, which were privately negotiated, far outstripped the largest public US dollar perpetual bond previously issued in Asia which was US$3.2 billion, according to Thomson Reuters data.
Market insiders said BoC’s large investment, which was made via a Cayman Islands-domiciled special purpose investment vehicle, was an unusual move for the lender as it had not helped arrange any of the earlier stage short-term financing.
Industrial Bank Co Ltd has also invested US$1 billion through perpetual bonds, while Morgan Stanley – the only non-Chinese company involved in the new financing – has provided US$2 billion via convertible preferred shares.
The ambitious Syngenta takeover is nearing the finish line after regulators last month granted the final approvals and as more than 90 percent of Syngenta shareholders have tendered their shares.
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