FM: CNOOC's Unocal bid is pure business
(Agencies)
Updated: 2005-06-29 09:03

China said it opposed any political interference in China National Offshore Oil Corporation's (CNOOC) 18.5-billion-dollar bid to buy US oil major Unocal, amid signs of growing concern in Washington.

Foreign Ministry spokesman Liu Jianchao speaks at the ministry's regular press briefing in Beijing June 28, 2005. He said political interference in CNOOC's bid for US oil firm Unocal is undesirable. [fmprc.gov.cn]

"The economic cooperation between China and the US serves the interests of both sides. The bid by CNOOC for Unocal is a normal commercial activity between enterprises," foreign ministry spokesman Liu Jianchao told journalists on Tuesday.

"We think that these commercial activities should not be interfered in or disturbed by political elements."

CNOOC's bid, easily China's biggest foreign corporate takeover yet, trumped a rival offer for Unocal by US company Chevron Corp and reflects Chinese companies' ambition to expand overseas.

The US government on Friday said the takeover bid was likely to be reviewed on national security grounds, with US officials acknowledging fierce disquiet over a Chinese company controlling a major player in the sensitive US energy sector.

The bid comes amid growing concerns in the US over China's rise as an economic power and accusations that China manipulates its currency in order to sell its products abroad cheaply.

CNOOC's chief executive Fu Chengyu heads to the United States this week where he is expected to join the company's negotiation team and play a role in dispelling US concerns over the deal.

Fu told Xinhua news agency that the company would cooperate in any review of its bid by the US Treasury's Committee on Foreign Investments in the United States (CFIUS).

CNOOC, which is 70 percent owned by the state, said the merged group would benefit from the companies' complementary strengths and unlike the Chevron bid, its offer would involve no job losses.

"It is important to know that 70 percent of Unocal's current reserves are located in Asia, and that is one of the reasons why this transaction makes sound business sense for our company," Xinhua quoted Fu as saying Friday.

Meanwhile the company, which is listed on the New York and Hong Kong stock exchanges, said that it had secured 16 billion dollars in financing for the cash bid.

CNOOC will take out a long term 4.5 billion dollar loan and a 2.5 billion dollar "bridging" loan from its Beijing-based parent China National Offshore Oil Corp, as part of its cash bid for Unocal, the company said in a statement on its website.

An additional 6.0 billion dollars would come from a long-term loan from the state-owned Industrial and Commercial Bank of China (ICBC), the statement said.

Goldman Sachs Credit Partners L.P. and JP Morgan Securities (Asia-Pacific) Ltd would also offer a 3.0 billion dollar loan, while CNOOC had cash on hand amounting to another 3.0 billion dollars, it said.

"CNOOC has already received letters of commitments from Goldman Sachs, JP Morgan, the ICBC and our parent company for the above financing," the statement said.

However, on the Hong Kong stockmarket investors were factoring into CNOOC's share price the prospect that the deal may not go ahead.

CNOOC's share price surged 0.3 Hong Kong dollars to 4.6 on the oil price rise and expectations that the company's bid for Unocal will not succeed due to opposition from the US lawmakers, dealers said, noting that such hopes have eased fears over the company's gearing.

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