Bank of China provides a $2.2 billion USD loan to Sinopec for its acquisition of Daylight Energy and for refinancing purposes

Project narrative

On December 20, 2011, the Bank of China (BOC) entered into a $2.2 billion USD unsecured credit bank facility agreement with 1635905 Alberta Ltd. — a Canada-incorporated special purpose vehicle (SPV) wholly-owned by Sinopec International Petroleum Exploration and Production Corporation (SIPC) — to finance Sinopec's acquisition of Canadian oil and gas company Daylight Energy Ltd. The loan could be drawn upon for up to six months from December 20, 2011, subject to certain conditions and carried a maturity period of five years and a final maturity date of December 20, 2016 and an interest rate of LIBOR plus a margin. The facility included financial covenants and required the company to comply with certain customary covenants, including compliance with applicable laws. Sinopec issued a guarantee for the loan. There was a $9.0 million USD duration fee. Daylight Energy was an oil and gas company company headquartered in Calgary, Alberta, predominating operating as a natural gas company with core assets in 69 oil and gas fields in northwest Alberta and northeast British Columbia and an average production of 38,000 barrels of oil equivalent per day in the first half of 2011. Daylight was listed on the Toronto Stock Exchange. At the time, Daylight Energy's stock was cratering, having lost 55% of its value in 2011 amidst falling oil prices and rising debt. In October 2011, Sinopec International Petroleum Exploration and Production Corp (SIPC) agreed to buy Daylight Energy for $2.2 billion CAD ($2.1 billion USD), $10.08 CAD per share. The acquisition was expected to be closed before the end of 2011. Analysts believed China wanted to export liquefied natural gas from western Canada. It was speculated the acquisition would face review under the Investment Canada Act to determine if foreign purchases of domestic firms are of net benefit to Canada. 1635905 Alberta Ltd. and Daylight amalgamated on December 23, 2011 to form Daylight, which resulted in an inadvertent breach of the covenants under the BOC loan. As part of the funding for the acquisition of Daylight, $1.5 billion USD was drawn as at December 31, 2011. On April 13, 2012, Sinopec used proceeds under the BOC loan to fully repay a previous $650 million CAD revolving credit facility known as "Syndicated Canadian Facilities", issued by unspecified lenders. $1.5 billion USD had been confirmed drawn on the facility in 2011 as part of the funding for the acquisition of Daylight Energy Ltd. by 1635905 Alberta Ltd., Sinopec's original corporate vehicle in Canada. Sinopec Daylight was formed as an amalgamation of 1635905 Alberta Ltd. and Daylight Energy Ltd., both formerly registered foreign corporations in Alberta, Canada. Sinopec Daylight is now the operated portion of Sinopec Canada Energy Ltd.