The deal on the entry of the Chinese CEFC into the capital of Rosneft is postponed indefinitely. According to the rating agency Chengxin, buying a 14.2% stake will increase the debt burden of the problematic CEFC too much, so there is a risk that this investment will be lost.
The Chinese private company CEFC, which faced serious problems in recent weeks, postponed the deal to acquire a 14.2% stake in Rosneft, Bloomberg reported citing the rating agency China Chengxin International Credit Rating. According to Chengxin, the purchase of a stake depends on external financing and will require a huge initial payment. In this case, CEFC will face "a significant increase in the debt burden," the rating agency reports, if there is no deal, the company is threatened with the loss of this investment.
Recall, the little-known CEFC is the ultimate acquirer of the bulk of the 19.5% stake in Rosneft, privatized in 2016. Then this package was bought by a consortium of the Qatar investment fund QIA and the Swiss trader Glencore.
In September 2017, it became known that most of the package is sold to the Chinese for $ 9.1 billion, and the bulk of the funds should be provided by VTB (the Chinese have not started a sample of the credit line).
But the deal was not closed: by the beginning of 2018, the CEFC faced problems in China itself. The media reported the detention of CEFC founder E Jianming on suspicion of corruption, there were reports of the company's problems with raising funds, and last week the Chinese state fund China Huarong Asset Management Co. acquired 36.2% in CEFC Hainan - the CEFC structure, for which Rosneft shares are directly acquired.
The purchase of the Chinese CEFC stake in Rosneft is delayed
When the transaction closes for $ 9.1 billion, it is unclear, writes Bloomberg
In September 2017, the Chinese CEFC announced its intention to buy a 14.16% stake in Rosneft for $ 9.1 billion from the Qatar investment fund QIA and Glencore. Igor Sechin, the chief executive officer of Rosneft, even promised that the deal would be closed before the end of 2017. But it is postponed indefinitely, Bloomberg reports with reference to the China Chengxin International Credit Rating.
The agency said that the transaction will require a substantial initial payment and depends on the funding raised from abroad. The deal is delayed due to the risk of too much growth in the CEFC's credit load. At the same time, the rating agency notes that in case the deal is not closed, CEFC expects significant losses.
"In transactions of this kind, the parties usually detail the distribution of the risks of a disruption of the transaction," says Tertychny Agabalyan partner Ivan Tertychny. "This is always the subject of negotiations, and as the parties have allocated the risks of the disruption of the transaction, in this case it is impossible to understand from the publicly disclosed information." But if the CEFC has signed legally binding documents on the purchase, most likely, the risk lies precisely on the CEFC, suggests a lawyer.
The representative of Glencore declined to comment, his colleague from Rosneft did not answer Vedomosti's questions. Representatives of the CEFC and QIA did not answer the questions.
Now the joint company Glencore and QIA - QHG Oil owns 19.5% of Russia's Rosneft. In September, CEFC's "daughter" CEFC Hainan paid "several hundred million dollars" of QHG Oil for the start of the deal, two interlocutors who are close to different sides of the deal tell. 20% of the total amount ($ 1.8 billion) CEFC Hainan must pay until April 1, the remainder - $ 7.3 billion - until September 2018, continues one of Vedomosti's interlocutors. On such terms, and knows the interlocutor of "Vedomosti" in one of the major creditors of QHG Oil.
Events around the Chinese CEFC since early 2018 are developing actively: at the beginning of the year Vedomosti sources told that the deal should be closed before the end of February 2018, then the interlocutors of RBC specified that the issue was "suspended" due to the inability to obtain financing in China Development Bank, and after that Glencore named a new deadline for the deal - "in the first quarter of 2018".
But soon it became known about the problems of CEFC: the founder of the company E Jianmin interrogated the Chinese special services, wrote the Chinese media, then Reuters reported the arrest of the businessman. Interlocutors Vedomosti, close to the CEFC, said that now E Jianming is under house arrest, to lift restrictions from him at the end of March.
Last week, it became known that the future shareholder of Rosneft recently had a new co-owner - Huarong Asset Management. Huarong is controlled by the state-owned company China Life Insurance and the Ministry of Finance of China. Huarong Asset Management in December 2017 and February 2018 acquired 36.2% of CEFC Hainan in two tranches. The deal was not disclosed, but the charter capital of CEFC Hainan increased by $ 1.52 billion (9.6 billion yuan). The remaining 63.8% of CEFC Hainan is owned by another "daughter" of CEFC - CEFC Shanghai International Group Co.
VTB is ready to provide CEFC Hainan with 5.1 billion euros in the form of a bridge loan for two years, Andrei Kostin said in January. "We have signed all agreements, a credit line has been opened, which the company can use at any time. They paid all commissions, legally binding commissions from both sides already exist. " But by early March, the CEFC had not used VTB loans, the source close to one of Rosneft shareholders said, and also a person close to one of the parties to the deal being prepared. "The deal is moving," he clarified after information about the detention and interrogation of CEFC founder E Jianming appeared in the Chinese media.