Brightoil secures $4b credit facility from CDB
Updated: 2011-01-08 07:15
By Emma An(HK Edition)
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Brightoil Petroleum Holdings Ltd, the top bunker fuel supplier in the Pearl River Delta region, said Friday that it has secured a $4 billion financing facility from China Development Bank Corp (CDB) to support its expansion drive.
The bank will provide the five-year credit facility to help the company buy tankers, expand its petroleum products trading business and make acquisitions at home and aboard, Brightoil Chairman Sit Kwong-lam said Friday at a media briefing on the deal.
Based on the agreement signed by the two sides, CDB will also provide advice on mergers and acquisitions, investment banking services and finance to Brightoil.
"We are looking at new opportunities in both China and abroad to further expand all four segments of our business," Sit said.
The company's main operations include bunkering, oil storage, marine transportation and upstream business.
"Bunkering has a lot of potential in offshore China and now that the company can get recapitalized from a reputable source like China Development Bank, I think the business model is now proven to be viable," said Gordon Kwan, head of regional energy research at Mirae Asset Securities in Hong Kong.
The credit facility could give a great boost to the Hong Kong-listed company's expansion, which has been gathering pace over the past two years. It saw its bunkering operations expanding from its Shenzhen port to six other ports in Asia and Europe including Hong Kong, Singapore and Antwerp-Rotterdam-Amsterdam.
The company is also expanding its fleet. In August 2010, it ordered five 318,000-metric-ton vessels, which will be delivered in 2012-2013. The company took delivery of four oil tankers with tonnage of over 100,000 metric tons each last year.
The massive global expansion, coupled with the strong domestic demand for energy, has significantly boosted the company's earnings. Its net profit surged 3.3 times to HK$1.14 billion in the year ended June 30, 2010 on revenue of HK$13.63 billion, which was also up 1.5 times compared to the previous year, with the overseas operations contributing approximately HK$7.25 billion of the revenue. Sales volume of bunker oil, the company's core business, jumped 1.17 times to 3.9 million metric tons during the same period.
Meanwhile, the company is seeking to venture into the upstream business by teaming up with China National Petroleum Corporation, China's largest state-owned energy company, for development of a natural-gas well in the Tarim Basin in Xinjiang. Production of the well is expected to start during the second half of 2011, the company said.
"We believe we are in a great position to drive the rapid development of our business, ultimately creating greater returns for the bank and investors," said Sit.
As the second-largest oil consumer in the world after the US, China now accounts for around a third of the world's oil consumption. The country imported 204 million metric tons of oil in 2009, approximately 52 percent of the country's total oil consumption. Analysts predict that by 2020, nearly 65 percent of the oil consumed in China will have to be imported.
Brightoil's Hong Kong-listed shares jumped 7.93 percent to close the Friday session at HK$4.9, outperforming the Hang Seng Index's 0.42 percent lose. Its shares surged about 70 percent over the last year, significantly beating the index's 5 percent gain for the year.
Reuters contributed to this story.
China Daily
(HK Edition 01/08/2011 page2)