Narrative
Full Description
Project narrative
On July 7, 2008, China Oilfield Services Limited (COSL) — a Chinese state-owned oilfield services company majority-owned by China National Offshore Oil Corporation (CNOOC) — entered into an agreement with Awilco AS and Aweco Holding AS to acquire 40.11% stake in Awilco Offshore ASA — a Norwegian oil and gas drilling services firm and contractor — for kr85 NOK ($16.72 USD) per share, or a total consideration of around $2.5 billion USD (kr12.7 billion NOK). Awilco AS and Aweco Holding were the majority shareholders of Awilco Offshore, and agreed to sell their 40.11% stake to COSL, triggering a tender offer from COSL for the rest of the shares, with the offer to proceed if COSL acquired 90% of Awilco, albeit with an option to proceed at 66.67%. In August 2008, the Export-Import Bank of China entered into a $800 million USD (RMB 5.4546 billion) overseas investment loan agreement with China Oilfield Services Limited to facilitate the acquisition of a 100% stake in Awilco Offshore. This unsecured loan carried a maturity period of 12 years, a final maturity date of September 2, 2020, a grace period of three years, a first repayment date of September 2, 2011, and a semi-annual principal repayment scheme with installments of $42,100,000 USD due every six months and a final repayment installment of $42.2 million USD (19 total installments). This loan carried an interest rate based on LIBOR plus a margin of 170 basis points (bps), with interest due quarterly. The proceeds were to be used by the borrower to partially finance the $2.5 billion USD acquisition of Awilco Offshore. Record ID#103568 captures the China Eximbank loan. On August 27, 2008, a syndicate of 13 banks — including the Grand Cayman and Hong Kong Branches of the Bank of China (BOC) and the Tokyo, Macau, Luxembourg, Sydney, and Frankfurt Branches of the Industrial and Commercial Bank of China (ICBC) — signed a $1.5 billion USD (RMB 10.3 billion) syndicated loan agreement with COSL Norwegian AS (CNA) — a Norway-incorporated special purpose vehicle (SPV) limited liability company and wholly owned subsidiary of COSL Singapore Limited, a Singapore-incorporated SPV and wholly-owned subsidiary of COSL HongKong International Limited, a Hong Kong-incorporated SPV and wholly-owned subsidiary of COSL — to facilitate the acquisition of a 100% stake in Awilco Offshore. This loan carried a maturity period of one year with extension options to take the maturity period to four years; this loan had a borrowing period from September 24, 2008 to September 24, 2009 (final maturity date). This loan carried an interest rate based on LIBOR plus a margin of 1.7% with interest payments due semi-annually. This was secured by (i.e. collateralized against) a pledge of COSL Norwegian’s equity stake in Awilco Offshore ASA, upon completion of the acquisition. COSL Singapore issued a guarantee for the loan. The proceeds were to be used by the borrower to partially finance the $2.5 billion USD acquisition of Awilco Offshore. As of December 31, 2008, the borrower drew down $1,400,000,000 USD under the loan (RMB 9.568 billion). BOC, as leader of the syndicate, committed to allow $466,670,000 USD to repaid in January 2010, but the remaining $933,330,000 USD was due on the originally scheduled maturity date of September 24, 2009. Record ID#103590 captures the contributions of the two BOC branches. Record ID#103591 captures the contributions of the five ICBC branches. In addition to BOC and ICBC, the following lenders contributed to the loan syndicate: Calyon, HSBC Bank Plc, Standard Chartered Bank (Hong Kong) Limited, Standard Bank of South Africa, Sumitomo Mitsui Banking Corporation (SMBC), and the Hong Kong Branch of SMBC. BOC, Calyon, HSBC, Standard Bank, Standard Chartered, and SMBC served as mandated lead arrangers. In addition to the $2.2 billion USD of loans, COSL used $200 million USD from its internal resources to fund the consideration. COSL Norwegian's tender offer was published on July 17, 2008. As of August 30, 2008, a majority of Awilco's shareholders had accepted the offer, and the deal was waiting for Chinese regulatory approval, with completion expected by the end of September 2008. On September 29, 2008, COSL Norwegian acquired a 98.8% interest in Awilco; then on October 15, 2008, COSL Norwegian acquired remaining 1.2% interest in Awilco, giving it a 100% stake in Awilco for an overall purchase consideration of $2,333,894,927 USD (approximately RMB 16,094,230,000). On October 30, 2008, Norway Oslo Security Exchange approved the de-listing of Awilco. On October 31, 2008, the trading of Awilco shares ceased; Awilco Offshore became a private company on November 15, 2008. At the time of the acquisition, Awilco Offshore had a fleet of five modern jack-up and two accommodation rigs, with six rigs under construction, including three semi-submersible units, all due for delivery in 2008 and 2009, with options for two more new rigs. It provides drilling services and operates jack-up and semi-submersible drilling rigs. Awilco operated in Australia, Norway, Vietnam, Saudi Arabia, and the Mediterranean. In 2007, Awilco had $203.5 million USD in revenue. The deal was the first major successfully cross-border acquisition by an A- and H-share Chinese company and the largest 100% stake overseas acquisition in the non-oil and gas sector in China by value to date. This was the largest cross-border acquisitions by a Chinese company in the oil and gas sector. The acquisition was expected to improve COSL's overseas operations and give it access to international management expertise and technology. It came at a time when oil and gas were in high demand in China. It increased COSL's drilling rig-fleet from 15 to 22 and enabled it to better market its non-drilling services such as marine transport and seismic mapping, to Awilco's existing customers like BP, Statoil, and Repso. After the acquisition, Awilco Offshore ASA was renamed COSL Drilling Europe AS (CDE). On April 30, 2009, BOC entered into a $2,200,000,000 USD credit facility agreement with COSL to refinance Awilco's debt and for its daily operations. This unsecured loan carried a final maturity date of April 29, 2017 (a maturity period of eight years), a first principal repayment date on May 14, 2012 (a grace period of three years), a bi-annual principal repayment scheme of 11 installments, and an interest rate based on LIBOR plus a margin of 138 bps. This loan was divided into two tranches: a $1,700,000,000 USD tranche for the replacement and refinancing of COSL Norwegian AS (CNA)'s loans and bonds (previously loans to Awilco Offshore ASA), namely loans from Nordea Bank and a $500,000,000 USD tranche to finance CNA's daily operations and for working capital purposes. Record ID#103592 captures the $1.7 billion USD tranche. Record ID#103593 captures the $500 million USD tranche. On May 22, 2009, ICBC entered into a $600,000,000 USD (RMB 4.0991 billion) loan agreement with COSL for the Awilco Acquisition Refinancing Project. This unsecured loan carried a final maturity date of May 21, 2017 (a maturity period of eight years), a first principal repayment date of May 22, 2012 (a grace period of three years), a bi-annual principal repayment scheme of 11 installments and an interest rate based on LIBOR plus a margin of 90 bps. The proceeds were to be used by the borrower to partly refinance the $1.4 billion USD drawn under the $1.5 billion USD syndicated loan used for the acquisition of Awilco. Record ID#103594 captures the $600 million USD ICBC loan. On May 25, 2009, BOC entered into a $800,000,000 USD (RMB 5.4655 billion) loan agreement with COSL for the Awilco Acquisition Refinancing Project. This unsecured loan carried a final maturity date of May 24, 2017 (a maturity period of eight years), a first principal repayment date of May 25, 2012 (a grace period of three years), a bi-annual principal repayment scheme of 11 installments, and an interest rate based on LIBOR plus a margin of 90 bps. The proceeds were to be used by the borrower to partly refinance the $1.4 billion USD drawn under the $1.5 billion USD syndicated loan used for the acquisition of Awilco. Record ID#103595 captures the $800 million USD BOC loan. In 2017, COSL fully repaid the $2.2 billion USD BOC credit facility, the $800 million USD BOC loan, and the $600 million USD loan from ICBC per the repayment schedule. In 2020, COSL fully repaid the $800 million USD China Eximbank loan per the repayment schedule.
Staff comments
1. The specific borrowing institution is clear; it is plausible, if not likely, that COSL Norwegian AS was the borrower, as the proceeds were used to support it; however, China Oilfield Services's annual reports are not explicit. For now, AidData has coded China Oilfield Services as the receiving institution. This merits further investigation. 2. A 6-month LIBOR was assumed. The average 6-month LIBOR for April 2009 was 1.67777%. Therefore, AidData has coded the interest rate as 1.67777% + 1.38% (138 bps) = 3.05777%.