ACQUISITIONS

Brightoil to seek CDB funding for Anadarko deal

PUBLISHED : Friday, 21 February, 2014, 1:11am
UPDATED : Friday, 21 February, 2014, 3:20pm

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Brightoil Petroleum, controlled by mainland businessman Sit Kwong-lam, will seek financing from China Development Bank to fund its US$1 billion acquisition of the minority stake in two oilfields from American company Anadarko Petroleum.

Sit, the firm's chairman, sought to allay concerns that the large deal would stretch the company's balance sheet, given that it had planned capital expenditure of US$300 million this year to build large-scale fuel storage facilities on the mainland.

"We obtained US$4 billion of credit lines from CDB a few years ago, and we have only drawn down US$700 million so far and CDB has written us a letter expressing its support of our purchase," he told reporters after Brightoil posted a net profit of HK$544.9 million for last year. This was a turnaround from a loss of HK$871.1 million in 2012.

The fields being bought from Anadarko are majority-controlled by state-backed oil producer CNOOC, which has the right to block the deal and buy Anadarko's stake itself.

Sit said that while this was possible, CNOOC would have to pay a premium of US$100 million due to tax implications since it would be buying directly into the fields whereas Brightoil was buying shares in the firms that owned the stakes. He added that since Beijing was encouraging the country's state oil firms to allow private companies to participate in their projects, CNOOC might not block the deal.

The storage facilities would be completed in phases between the first half of next year and the second half of 2016, and they had been funded by project financing, Sit said.

Brightoil's bank loans and bonds amounted to 84 per cent of shareholders' equity at the end of last year. Deducting cash, pledged bank deposits and receivables from brokerages, the ratio was 43 per cent.

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