CNOOC Seeks $6B Loan to Back Nexen Buy

CNOOC Seeks $6B Loan to Back Nexen Buy

Chinese state-controlled oil company CNOOC Ltd., which in July proposed to buy Canada's Nexen Inc. for $15.1 billion, is seeking to raise $6 billion from a one-year loan to help fund the purchase, people with direct knowledge of the matter said Wednesday.

CNOOC, China's largest offshore oil company by production, is inviting around 15 banks to participate in the loan, which would offer a yield of less than 1.5%, one of the people said.

These include U.S., European and Chinese banks, but the cash-rich Japanese lenders that are usually involved in loan deals involving Chinese? state-owned companies haven't been invited to take part this time, the person said. This may be because of Chinese anger over Japan's decision to purchase a set of disputed islands in the East China Sea earlier this month.

The banks have until mid-October to state the amount they would be prepared to lend to CNOOC, the people said.

Last week, CNOOC's planned acquisition of Nexen took a step nearer completion after a Canadian court cleared the deal.

The proposed deal must still secure regulatory approval from the governments of Canada, China and the U.S., but CNOOC expects the purchase to be completed in the fourth quarter. The Chinese company's offer has sparked a debate in Canada about how big a role state-owned enterprises should have in the Canadian economy and in the development of the country's resources.

Acquiring Nexen would allow CNOOC to secure oil and gas reserves in western Canada, the North Sea, the Gulf of Mexico and offshore Nigeria. CNOOC said earlier the deal would boost its oil and gas output by about 20% and enlarge its oil and gas reserves by nearly a third.

Copyright (c) 2012 Dow Jones & Company, Inc.


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