Bloomberg News

Citigroup Said to Consider Partial Sale of China Gas Loan

December 13, 2011

(Adds details of acquisition financing.)

Dec. 13 (Bloomberg) -- Citigroup Inc. may sell part of a loan it’s providing for China Petroleum & Chemical Corp. and ENN Energy Holdings Ltd.’s bid for China Gas Holdings Ltd. to other banks, two people familiar with the matter said.

A decision on whether to syndicate the facility has not yet been made, one of the people said, asking not to be identified as the details are private.

Citigroup is providing a so-called bridge loan to ENN Energy, according to a joint statement released today in Hong Kong by Sinopec, as China Petroleum is commonly known, and ENN Energy. A bridge loan is a short term loan that is usually replaced by longer term financing.

Sinopec and ENN Energy are offering HK$15.3 billion ($2 billion) cash, or HK$3.50 a share, for the Hong Kong-based company that supplies piped gas to China, according to the statement. The offer is 25 percent more than China Gas’s Dec. 12 close. Its shares closed at HK$3.37 today.

Buying China Gas will give Sinopec and ENN Energy access to its 6.6 million residential customers and 41,981 industrial and commercial users in the world’s second-biggest economy.

The loan will be split into two parts, one to fund the acquisition of shares as well as costs, fees and expenses related to the offer, and the other to refinance or repay a $150 million loan signed by ENN Energy in November 2009, according to the document.

The first part will mature five months after the funds are first used while the second will mature on May 31 next year, according to the statement. Bank of China Ltd. helped arrange the 2009 loan, according to the statement.

The new loan will be guaranteed by ENN Gas Investment Group Ltd. and ENN Gas Hong Kong Investment Ltd. ENN Energy has agreed that on or before May 31 2012, the repayment or prepayment of the facility will equal at least $250 million, according to the statement.

Citigroup is the financial adviser to ENN Energy and Sinopec, according to the statement.

--Editors: Katrina Nicholas, Andrew Monahan

To contact the reporter on this story: Wendy Mock in Hong Kong at wmock3@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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