Bank of China provides a $700 million USD loan to support the acquisition of all issued share capital in Sirtex Medical Limited by CDH Genetech and China Grand Pharmaceutical and Healthcare Holdings Limited

Project narrative

On May 4, 2018, CDH Genetech Limited and China Grand Pharmaceutical and Healthcare Holdings Limited made a non-binding, indicative proposal to acquire all the issued share capital of Sirtex Medical Limited, an Australian medical devices company, for a cash consideration of $1.9 billion AUD ($1.4 billion USD). Then, on May 22, 2018, CDH Genetech and China Grand Pharma made a binding offer to acquire Sirtex for $1.9 billion AUD. Then, on June 14, 2018, CDH Genetech and China Grand Pharma entered into a scheme implementation deed with Sirtex Medical Limited, in which CDH Genetech and China Grand Pharma offered to purchase all the shares in Sirtex shares for a consideration of $33.6 AUD per share by way of scheme of arrangement. As part of the arrangement, CDH Genetech would take control of 51% of Sirtex and China Grand Pharma would take a 49% stake in it. To finance its purchase of a 49% stake in Sirtex, China Grand Pharma used its cash and took out $2.8 billion HKD ($474 million AUD) loan facility from Sun hun Kay Investment Services. To support its acquisition of the 51% stake in Sirtex, on May 18, 2018, as amended on May 21, 2018, June 7, 2018, and June 8, 2018, the Macau Branch of the Bank of China (BOC) entered a legally binding commitment letter with CDH Genetech for the provision of a $700 million USD ($933 million AUD; $5.490 billion HKD) loan to Grand Pharma Sphere Pte Ltd — a special purpose vehicle (SPV) registered and incorporated in Singapore jointly owned by CDH Genetech (51% equity stake) and British Virgin Islands-incorporated Grand Decade Developments Limited (49% equity stake), a wholly owned subsidiary of China Grand Pharmaceutical and Health Holdings Ltd — for the acquisition. In the letter CDH Genetech agreed that members of the Sirtex Group would accede to the facilities as guarantors and provide security over their assets in favor of BOC Macau Branch once the loan was finalized. This loan reportedly was a dual-tranche loan. BOC served served as mandated lead arranger, bookrunner, agent, and security agent. On November 30, 2018, Sirtex Medical Limited assigned a security interest over its patent (US20170151357A1) for a method for treating renal cell carcinoma to BOC Macau Branch. Previously in late January 2018, Sirtex had agreed to be acquired by American medical technology firm Varian Medical Systems for $1.6 billion AUD; the CDH Genetech-China Grand Pharma "last minute offer", which valued Sirtex's closing shares at a 78% premium, was reported to have surprised the Sirtex board just one working day prior to the May 2018 meeting that would have approved the Varian purchase. As part of the arrangement, the Chinese firms sought approval from the Committee on Foreign Investment in the United States (CFIUS) because Sirtex had U.S. operations. In fact, the transaction required a voluntary notification of the acquisition to CFIUS; the acquisition would be terminated and a $200 million AUD fee would be assessed to CDH Genetech to be paid to Sirtex if the Chinese firms withdrew from the CFIUS notification (this was one condition, among several, where the termination and fee could be charged). Under the scheme implementation deal, the Chinese firms agreed to abide by CFIUS-mandates relating to the sale, divestiture, license, or disposition of any constituent element of, restrictions or limitations on operations or access and management rights to, outsourcing business relating to U.S. patient data, manufacturing, and activities involving radioactive materials for, Sirtex's U.S. operations. Additionally, the Board of Sirtex reserved to the right to compel the Chinese firms to restructure ownership and internal arrangements over Sirtex to meet CFIUS's concerns. Receipt of CFIUS approval was not required for the Sirtex to complete the acquisition, but the Chinese firms and Sirtex agreed to seek it anyway. The Australian-counterpart of CFIUS, the Australian Foreign Investment Review Board (FIRB), issued its approval of the transaction on July 3, 2018, and the Federal Court of Australia approved it on September 12, 2018. The actual acquisition of the shares was completed on September 20, 2018. Grand Pharma Sphere (Australia Bidco) Pty Limited, a wholly-owned subsidiary of Grand Pharma Sphere Pte Ltd, was the specific acquiring entity of Sirtex. Then, in March 12, 2019, CFIUS granted its approval for the acquisition. China Grand Pharma stated that the acquisition was approved after the Chinese firms assured CFIUS that there were no unresolved national security concerns with the acquisition. Sirtex Medical, based in Sydney, is a firm known for developing cancer treatments using small particle technology. It specialized in oncology treatment using Selective Internal Radiation Therapy (SIRT). At the time of the purchase, Sirtex had regulatory approval for radioactive treatment for live cancer and manufacturing capabilities in Germany, Singapore, and the United States.