Shearman & Sterling Advises on Largest Project Financing To Date for Sino-Foreign Joint Venture in China

6 Sep 2007 LAWFUEL – The Legal Newswire – Beijing, September 6, 2007—Shearman & Sterling has advised the lenders, composed of 11 major PRC banks plus Sinopec Finance Company, on the financing of the Fujian Refining & Petrochemical Company Limited (FREP). This joint venture is the first integrated refining and petrochemicals project with foreign participation in China.

The debt facilities for FREP are arranged on a limited recourse basis, including both long-term and working capital facilities in Renminbi and US dollars. The facilities amount to approximately RMB30 billion (US$4 billion). Tenor for the long term facilities will be 20 years for Renminbi and 15 years for US dollars. The activities for the expansion of the existing refinery in Fujian Province and the addition of new petrochemical facilities are expected to be completed in early 2009.

The Shearman & Sterling team was led by partner Andrew Ruff (SH-PDF), working with associates Nick Wang (HK-PDF), Miao Miao (SH-PDF) and Crystal Chen (SH-PDF). Commenting on the transaction, Andrew Ruff said: “We are delighted to act for the lenders on this landmark transaction, which reflects an ongoing appetite on the part of the Chinese banks to apply sophisticated financing structures to large and complex transactions. Having advised on four billion dollar-plus petrochemical financings in China in the last three years, we believe we are extremely well placed for involvement in future large oil & gas and infrastructure projects in the PRC.”

Shareholders in FREP are the Fujian Petrochemical Company Limited (50%), ExxonMobil China Petroleum and Petrochemical Company Limited (25%) and Saudi Aramco Sino Company Limited (25%).

Fujian Petrochemical Company Limited (FPCL) is owned 50% by China Petroleum and Chemical Corporation (Sinopec) and 50% by the Fujian Government. ExxonMobil China Petroleum and Petrochemical Company Limited (ExxonMobil) is a wholly owned affiliate of Exxon Mobil Corporation and Saudi Aramco Sino Company Limited is a wholly owned affiliate of the Saudi Arabian Oil Company (Saudi Aramco).

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