Agricultural Bank of China contributes to a $6 billion USD syndicated bridge loan to finance CNOOC's acquisition of Nexen (Linked to Record ID#99336, #99337, #99338, and #99339)

Project narrative

On July 23, 2012, CNOOC Limited — a Hong Kong-listed oil and gas producer majority-owned by Chinese state-owned oil company China National Offshore Oil Corporation (CNOOC) — and CNOOC Canada Holding Ltd. — a wholly-owned subsidiary of CNOOC Limited incorporated in Canada on July 18, 2012 — entered into an arrangement agreement with Nexen, Inc. — a Canadian oil and company company — in which CNOOC Canada Holding would acquire all (100%) outstanding (common and preferred) shares of Nexen— for $27.5 USD per share, or approximately $15.1 billion USD. In late July 2012, CNOOC began searching for a multi-billion dollar one-year bridge loan with an interest rate of 150 basis points (bps) to back the acquisition. By September 2012, CNOOC was targeting a $6 billion USD loan and had invited 15 banks to participate. Then, on February 19, 2013, a syndicate of 20 mandated lead arranger banks — including the Agricultural Bank of China (ABC), the Bank of China (BOC), China Construction Bank Corporation (CCB), China Development Bank Corporation (CDB), and the Industrial and Commercial Bank of China (ICBC) — entered into a $6 billion USD syndicated bridge term loan agreement with CNOOC Canada Holding Ltd. to finance the acquisition. This loan carried a maturity period of one year. It carried an interest rate of LIBOR plus a margin of 80 bps for the first six months, then LIBOR plus a margin of 100 bps for the next three months, and then LIBOR plus a margin of 120 bps for the remainder of the loan. It also carried an arrangement fee of 25 bps. CDB contributed $375 million USD to the loan syndicate, of which all was disbursed by the end of 2013. Record ID#99318 captures ABC's contribution. Record ID#99336 captures BOC's contribution. Record ID#99337 captures CCB's contribution. Record ID#99338 captures CDB's contribution. Record ID#99339 captures ICBC's contribution. In addition to the Chinese state-owned banks, the following lenders contributed to the loan syndicate: Australia and New Zealand Banking Group (ANZ), Bank of America Merrill Lynch (BAML), BMO Capital Markets (a subsidiary of Bank of Montreal), Bank of Nova Scotia (Scotiabank), Citibank N.A., Commonwealth Bank of Australia (CBA), Credit Suisse AG, DBS Bank, Deutsche Bank, HSBC Bank Plc, Société Générale Corporate & Investment Banking (SGCIB), Sovereign Bank, UBS AG, United Overseas Bank Limited (UOB), and Westpac Banking Corporation. Citi acted as sole coordinating bank. Nexen Inc. was a Canadian oil and gas company that explored for, developed, and produced crude oil and natural gas from conventional sources, oil sands and shale gas, in the United Kingdom's North Sea, Canada, the United States, Nigeria, Yemen, and Colombia. The Nexen subsidiaries included England and Wales-incorporated Nexen Petroleum UK Limited, Nigeria-incorporated Nexen Petroleum Nigeria Limited, DElaware-incorporated Nexen Petroleum Offshore USA Inc., Alberta-incorporated Nexen Marketing, and Alberta-incorporated Nexen Oil Sands Partnership. Nexen's Nigeria assets, via Nexen Nigeria Limited, included a 20% non-operating interest as a contractor in the production sharing contract covering the Usan oilfield in the OML 138 block. Nexen's U.S. assets included approximately 175 exploration blocks with 36 prospects in the Gulf of Mexico and several exploration blocks in offshore Alaska. Nexen's Canada assets included a 100% interest in the Long Lake project and three other oil sands projects in northeastern Alberta, a partial interest in the Syncrude oil sand projects, and the Horn River, Cordova, and Liard shale gas basins. Nexen's Colombia assets included several exploration and production blocks. Nexen's United Kingdom Assets, located in the North Sea, included a 43.2% interest in the Buzzard oilfield, one of the largest oilfields in the Noth Sea, a 36.5% interest in the Golden Eagle block, which was expected to begin operations in 2014 at the time of the acquisition, and an interest in the Rochelle gas field. As of December 31, 2012, Nexen's proven plus probably reserves were estimated at 2.2 billion barrels of oil equivalent, 0.9 billion proved and 1.3 billion probable, some 70% of the proved plus probably reserves were in Nexen's Canadian oil sand interests. Nexen's production before royalties average 197,900 barrels of oil equivalent a day in 2012. The acquisition was the source of controversy in Canada. There were concerns that allowing a foreign state-owned company to purchase Nexen would increase espionage risk and intellectual property theft, especially in the fracking and drilling techniques pioneered in the Alberta oil sands, that Chinese control over Canada's natural resources, especially the oil sands, would be strategically harmful to Canada, that CNOOC would end Nexen's charitable endeavors, and that it was improper to allow a country with a poor human rights record as China benefit in Canada. A public opinion survey conducted in Canada in mid-September 2012 found that nearly 7 out of 10 Canadians opposed the acquisition. In October 2012, Prime Minister of Canada Stephen Harper stated that the acquisition was of an uniquely-large scale and required scrutiny. To alleviate concerns, CNOOC promised that it would keep its North American headquarters in Calgary, Alberta, that it would make long-term investments in Canada's oil sands, it would list of the Toronto Stock Exchange, it would not mass layoff employees, and it would retain its management. On September 20, 2012, Nexen's shareholders voted in favor of the deal. On December 7, 2012, the Canadian Government approved CNOOC's application to acquire Nexen. On December 11, 2012, the UK's Department of Energy & Climate Change (DECC) announced that it would not oppose the detail. On February 12, 2013, the Committee on Foreign Investment in the United States (CFIUS) approved the transaction. The acquisition was completed on February 25, 2013 (February 26, 2013 Beijing time).}}. After the completion of the acquisition, CNOOC reorganized Nexen Inc. and amalgamated it with CNOOC Canada Holding ULC creating Nexen Energy ULC, a wholly-owned subsidiary of CNOOC Limited managing all of of its assets in North and Central America and all assets previously managed by Nexen. Nexen's global and North and Central America headquarters remained in Calgary, Alberta. With a total transaction value of $19 billion CAD ($17.1 billion USD), the acquisition was the largest-ever acquisition of a foreign company by a Chinese company. In February 2014, a syndicate of 14 banks — including the Bank of China (BOC) — signed a $2 billion USD loan agreement with Nexen Energy ULC to partially repay the $6 billion USD bridge loan. This loan carried a maturity period of one year and an interest rate of LIBOR plus a margin of 75 bps, an arrangement fee of 5 bps, but no committee fee. CNOOC Limited issued a guarantee for this loan. BOC contributed $80 million USD to the loan syndicate, as captured by Record ID#99340. Citibank contributed $180 million USD. The other 12 lenders all contributed $145 million USD, these banks being: ANZ, ATB Financial, Banco Santander S.A., Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Scotiabank, Bank of Montreal, CBA, DBS Bank, HSBC Bank, Société Générale S.A. (SocGen), UOB, and Westpac. In April 2014, CNOOC Nexen Finance offered guaranteed notes that would be used to repay the $2 billion USD loan facility. In the years following the acquisition, some observers felt that it been ill-advised, with CNOOC's promises to the Canadian Government not lived up to. For example, CNOOC fired CEO Kevin Reinhart less than a year after the closing of the deal. Elsewise, there were several industrial accidents under CNOOC's Nexen. A pipeline at the Long Lake oil sands facility spilled of over 31,000 barrels of emulsion into the muskeg, causing Alberta's largest such spill, that went undetected for almost a month. In July 2017, the Alberta Energy Regulator charged Nexen with failing to promptly report the spill and failing to manage its release. In January 2016, two workers were killed after an explosion at Long Lake's facility upgrader.