Qihoo 360 Technology Co Ltd (NYSE:QIHU) is now raising a $3.4 billion loan. According to the information provided by banking sources, the enterprise is doing so to back its $9.3 billion buyout by an investment group. The buyout is the latest sign that Chinese company are renewing their interest in delisting from US exchanges. The companies are now aiming at selling equity locally at a higher valuation. This also happens to be the biggest of the slew of “take Private” buyout offers announced this year.
The China Merchant Bank has fully underwritten Qihoo’s loan and has particularly invited two other Chinese banks to join the deal. This new loan has now brought the total volume of loans that US-listed Chinese companies raised close to $7.45 billion in 2015. Since the sponsors of the Renminbi-denominated loan are mainland Chinese companies, it is being raised in China.
For that reason, the borrowing entity will be an onshore company. It is also very clear that the buyouts have primarily targeted the US traded stocks since they are cheap as compared to Chinese-traded peers.
The acquisition loan won’t be launched into general syndication and is, therefore, expected to close before the year ends. The deal includes a $3billion, seven-year loan as well as a $400 million bridge loan facility. $77 in cash per share will be given to holders of each American Depositary Share (ADS), and two of them represent three Class A ordinary shares. On the other hand, Class A and B ordinary shares’ owners will receive $51.33 in cash per share.
All the entities that are controlled by Zhou, who is also the co-founder of Qihoo, have agreed to vote all their shares to favor the deal. The consortium taking the company private include Citic Guoan, Golden Brick Silk Road Capital, Sequoia Capital China, just to mention a few. Bank of China Macau, as well as Ping An Bank, were mandated by medical device manufacturer Mindray Medical International to arrange a $2.5 billion term loan.
Ping An Bank and Shanghai Pudong Development Bank also underwrote a $1.1 billion loan in August. The loan backed the $3.3 billion privatization of New York-listed WuXi PharmaTech (Cayman) Inc. there is also the possibility that industrial bank will arrange a debt financial to support Trina Solar Limited (ADR)(NYSE:TSL)’s proposed buyout.
Sources: reuters, taipeitimes