Shuanghui International, the world’s biggest producer of pork products, will finalise its US$4 billion syndicated loan next week, said bankers involved.
The deal has eight mandated lead arrangers and at least 20 more banks have committed to the offer in syndication, indicating the deal has gained strong support from lenders.
Another one or two banks may yet join the syndicate, says a banker involved.
The borrower is using the money to fund its acquisition of Smithfield, the biggest US pork producer. The deal will be the largest acquisition of an offshore firm by a Chinese company. Shuanghui International is to looking to complete a US$5 billion initial public offering in Hong Kong next year, say IPO bankers.
The loan shows international banks’ increasing willingness to lend to mainland firms – particularly those making offshore acquisitions – even though China’s capital controls force foreign lenders to be subordinate to onshore institutions in all debt offered by mainland firms.
Shuanghui International’s loan deal comes in two tranches. A US$2.5 billion three-year piece pays 350 basis points over Libor, while a US$1.5 billion five-year portion pays 450 basis points. The margin is fixed no matter at which level or amount a lender comes into the deal, although fees vary according to these criteria. Fees were not disclosed.