Source: Lisa M.Keefe, MEATINGPLACE, 9/3/13

Shuanghui International Holdings Inc. released a statement on Monday saying it has secured a $4 billion loan from a consortium of eight banks, part of the financing the Chinese pork giant needs to acquire Smithfield Foods, according to a report in the Global Times, an English- and Chinese-language news outlet covering China.

Shuanghui executives were not immediately available for comment, nor was the statement available on the company's website.

The loan agreement was signed on Friday, the Global Times said, and includes a $2.5 billion three-year loan and $1.5 billion five-year loan from the banks, which include Standard Chartered Bank, Industrial and Commercial Bank of China (Asia) Ltd, DBS Bank and Royal Bank of Scotland. The report quoted Shuanghui Chairman Wan Long saying that the financial support and trust of banks in China and elsewhere is encouraging.

The value of the transaction, first announced in May, has been calculated to be about $7.1 billion, including assumption of Smithfield’s net debt. Earlier in the process, Shuanghui has said that the purchase would be financed with $7 billion in borrowings from the Bank of China and Morgan Stanley. In July, as well, Shanghui sold about $900 million in senior notes to qualified investors through a subsidiary established specifically to sell the bonds.

Media coverage of this latest financing deal is not clear about whether the $4 billion loan is part of a financing arrangement already announced, or if it is a departure from financing strategies announced earlier.

According to the Global Times, analysts continue to speculate that Shanghui plans an IPO for the merged company, probably on a Chinese stock exchange, in order to raise funds to pay down the debt it is taking on in the acquisition. However, the company reportedly declined to discuss that possibility.

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