China Agri-Industries Holdings has been advised by Herbert Smith in relation to a US$250m five-year loan facility. China Agri is a producer of processed agricultural products and is the listed subsidiary of COFCO Corporation, a Fortune 500 Company. This is the first time that Herbert Smith has represented the COFCO subsidiary, with Gary Lock, managing partner in Beijing, heading the advisory team. Seven banks will provide finance – Banco Santander, Bank of Tokyo-Mitsubishi UFJ, Bank of China, CITIC Ka Wah, ICBC, Mizuho and Standard Chartered.

The loan facilities sector has been active in the last quarter of 2009 and looks promising for 2010. ‪ “We will continue to see an upturn in loans and bonds activity in the first half of 2010. The Chinese companies with the strongest business models and track record will have the most success,” said Alex Aitken, Herbert Smith’s Hong Kong-based banking & finance partner.

“There is an overhang of debt to be refinanced in the next year. Whether this will be successfully refinanced will depend on a number of factors, such as the financial strength of the borrower, availability for borrowers to tap the bond markets, and ability to use an IPO as a fund raising method,” he added. While certain borrowers might not be able to successfully refinance outstanding liabilities, windows for opportunities are open for restructuring and insolvency practice areas.

The surge of Chinese bank loans has seen some notable investments made into international projects, such as the Greek COSCO Pacific and Piraeus Container Terminal in which China Development Bank pumped in €339.4m. Last month, four Chinese banks made their debut loan with a US$1bn investment into South Africa.

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