China Biologic Products Holdings is in talks with banks for a loan of over $1bn to finance its take-private, said a banker close to the situation. The company is seeking both a bridge facility and a term loan.
The banker added that the bidding process has been going on for a while, but the company has yet to announce any mandate. He said the company is pushing for tighter pricing and better terms, leading to the long bidding process.
Nasdaq-listed China Biologic said in September that it received a preliminary non-binding privatisation proposal from Beachhead Holdings, Citic Capital China Partners, PW Medtech Group, Parfiled International, HH Sum-XXII Holdings and V-Sciences Investments. The consortium offered $120 a share to acquire all of the outstanding ordinary shares of the company in a deal worth $4.59bn.
Bankers said they expect more buyouts and take-private deals next year. A Singapore-based syndication banker said he has a couple of privatisation financing deals that are either ready to launch early next year or at the early discussion stage.
But there is also some scepticism in the market about these going-private transactions. The banker who bid for China Biologic said: “Stocks are trading at all-time highs, so if a company’s stock price is left behind, there must be some performance problems.
“But the healthcare industry in China is highly regulated, so you are putting bets for the regulations,” he added, saying that China Biologic is a good company considering the healthcare sector has growth potential.
Jiangxi Copper and China Mengniu Diary are also in the market seeking loans to support their acquisitions.
Jiangxi Copper has already secured a $700m loan from the onshore branches of China Development Bank, China Construction Bank and China Citic Bank for the purchase of First Quantum Minerals (FQM), a Canadian mining and metals company.
But it now also looking for another financing worth a few hundred million dollars. A banker close to the situation said the company is seeking more money because it may look to take a majority stake in FQM.
The Chinese copper producer announced in a stock filing this month that it agreed to acquire all the shares of PIM Cupric Holdings from Pangaea Investment Management for $1.1bn. PIM Cupric holds an 18% stake in FQM.
Bankers are also still pitching for a bridge loan of around $400m to support China Mengniu Dairy's A$600m ($407m) Lion Diary & Drinks buy. GlobalCapital Asia understands that the company is only seeking bridge facilities because it wants to maintain its credit rating. Mengniu Dairy, rated Baa1 by Moody's and BBB+ by S&P Global Ratings, is likely to use internal cash or bonds to take out the bridge facility.
State Grid Corporation of China has delayed mandating banks for a loan to support Sempra Energy’s Chilean business acquisition, due to political volatility in Chile. A banker who bid for the financing said the mandate is expected to be announced in the next two to three weeks.