April 26 (Bloomberg) -- China Petrochemical Corp., Asia’s biggest refiner, agreed to borrow $5 billion, an increase of $1.2 billion from its original plan, to fund overseas acquisitions, according to a person familiar with the matter.
The five-year term loans were offered to banks with interest and fee payments, the so-called top level all-in pricing, of 127 basis points more than the London interbank offered rate, said the person, who asked not to be identified because the details are private. China Petrochemical originally sought loans of $3.8 billion at the same price, according to two people familiar with the matter on April 18.
Huang Wensheng, a spokesman for Sinopec Group, as the refiner is known, declined to comment on the loan size. “Borrowing is part of the company’s normal operation,” he said by phone today. “It’s natural that the company is boosting capital for its overseas business.”
Sinopec Group is expanding abroad as the government’s fuel-price controls erode profit in its home market. Overseas assets rose to 31 percent of the total last year and international sales climbed to 27 percent, Huang said, without giving comparative numbers.
The company loses about $20 for every barrel of crude oil processed, the Economic Observer reported today. China controls fuel tariffs to curb consumer price inflation, which was 5.4 percent last month, the highest since 2008.
The loan will also be used to refinance debt associated with the group’s purchase of a stake in Syncrude Canada Ltd. last year, the person familiar with the group’s loan said today.
Sinopec Group on April 21 agreed to buy a 15 percent stake and liquefied natural gas in a venture with ConocoPhillips and Origin Energy Ltd. in Australia’s largest export deal for the fuel. In December it agreed to purchase Occidental Petroleum Corp.’s Argentine oil and gas unit for $2.45 billion.
On April 9, China appointed Fu Chengyu to the new position of chairman at Sinopec Group. Fu previously headed Cnooc Ltd., where he presided over a fivefold increase in annual profit since 2003.
To contact the reporter on this story:
To contact the editor responsible for this story: Alexander Kwiatkowski at firstname.lastname@example.org