OAO Rosneft, Russia’s largest oil company, is raising $14.2 billion of loans to finance the second part of its acquisition of TNK-BP, according to two people with knowledge of the deal.
The state-run company increased a two-year bridge facility to $11.9 billion from $9.8 billion originally targeted, said the people, who asked not to be identified because the transaction is private. A five-year term loan was cut to $2.3 billion from $3.2 billion, they said.
Bank of America Corp. and Citigroup Inc. coordinated the deal, which helps pay for the half of TNK-BP held by the group of billionaires represented by the AAR Consortium, the people said. Rosneft has raised a total of $31 billion from banks for the purchase of TNK-BP, the largest acquisition financing for a Russian company, according to data compiled by Bloomberg.
The five-year portion pays interest 200 basis points, or 2 percentage points, over the London interbank offered rate, said the people. That’s below the average 259 basis-point average margin for Russian energy company loans, according to data compiled by Bloomberg. Rosneft will be paying 10 basis points less than on a similar five-year loan for the acquisition financing signed in December, the people said.
The bridge loan pays a margin of 140 to 240 basis points more than Libor, the people said. Bridge loans usually mature within two years and are often used as backstops to bond offerings or longer-dated bank debt.
A Rosneft press official, who asked not to be named citing company policy, declined to comment on the financing when contacted by phone.