By Jacqueline Poh
China's state-owned Bright Food (Group) Co Ltd is seeking a syndicated loan of up to $800 million to back its acquisition of a majority stake in Israel's largest food company Tnuva, banking sources said.
Bright Foods said that it would buy 56 percent of dairy firm Tnuva, Israel's largest food company, from private equity house Apax Partners on May 22 in a deal that shareholder Mivtach Shamir Holdings said valued the dairy company at about $2.5 billion.
Bright Foods' deal follows similar acquisition loans for Chinese state-owned companies COFCO Corp, China's largest grain trader, and steel producer Baosteel Group Corp.
Bright Food was not immediately available for comment.
The Chinese state-owned companies are raising syndicated U.S. dollar-denominated loans in Hong Kong after tightening Chinese liquidity in 2013 made internationally-syndicated offshore loans cheaper than onshore loans.
State-owned Chinese companies have raised $2.6 billion of loans so far this year, with another $11 billion of deals in the pipeline, giving a total of $13.6 billion for the year to date, compared to a total of $17 billion of loans in 2013.
COFCO Corp. is currently in the market with a $3.2 billion acquisition loan to back its purchase of Noble Group Ltd's agribusiness unit and repay a shareholder loan.
Baosteel Group Corp is also seeking financing proposals for a loan of around $554 million equivalent in Australian dollars to to fund its takeover bid for Australian explorer Aquila Resources Ltd.
Seeking proposals
Bright Food has asked banks to send in proposals for one or three-year loans of up to $800 million equivalent in euros with bullet repayment.
The company sent out invitations to banks on Tuesday and has asked for indicative proposals within 10 working days, sources said.
Best known for its cottage cheese, Tel Aviv-based Tnuva had 2013 revenue of 7.17 billion shekels ($2.05 billion) from the sales of a range of cheeses, milk, yoghurt, meat and eggs.
Bright Food will pay Apax slightly less than $1 billion in cash for its 56 percent stake and will assume Apax's share of bank loans totaling 1.9 billion shekels, Reuters reported.
Bright Food's new acquisition loan is expected to have similar documentation to an $850 million loan that the company raised in October 2012 to finance its acquisition of a majority stake in British cereal maker Weetabix.
That deal consisted of a $550 million, three-year loan provided by Bank of China, China Development Bank, HSBC, National Australia Bank, Rabobank and RBS, and a $300 million, one-year bridge loan to a bond issue that was provided by HSBC, Rabobank and RBS.
The three-year loan had all-in pricing of 230 basis points (bps) and the one-year bridge loan paid up to 150 bps.
Bright Food guaranteed the 2012 loan, which was raised via a Hong Kong subsidiary.
