Gunvor Unit Markets $350 Million Loan After Timchenko Stake Sale

Apr 28, 2014 6:39 am ET

April 28 (Bloomberg) -- Gunvor Group Ltd. is marketing a $350 million credit line for its Singapore-based subsidiary a month after Gennady Timchenko, the oil trader’s Russian billionaire co-founder, sold his stake in the business.

Eight banks have already committed to the loans, which will be used to finance the company’s Asia-Pacific operations, according to an e-mailed statement from Gunvor. It plans to meet lenders in Singapore tomorrow, according to two people familiar with the matter, who asked not to be identified because the matter is private.

Timchenko sold his 44 percent holding to Swedish partner Torbjorn Tornqvist a day before the Russian was hit by U.S. sanctions that alleged Gunvor had a connection to President Vladimir Putin. Tornqvist said March 28 his priority is to ensure lenders continue doing business with the Cyprus- registered trader. Gunvor has not been sanctioned and has said it’s never had links to Putin.

“The commitments to this facility show that banks are comfortable with the shareholder shift as it is, and we have seen new banks coming in,” Chief Financial Officer Jacques Erni said in a telephone interview. The revolving credit facility will be increased as more lenders commit to the deal, Erni said.

The loan is being arranged by ABN Amro Bank NV, Arab Petroleum Investments Corp., DBS Bank Ltd., First Gulf Bank PJSC, ING Groep NV, Malayan Banking Berhad Bhd and Societe Generale SA, according to the statement. Rabobank International has also agreed to participate in the facility.

Lower Margins

The world’s fourth-largest oil trader is offering to pay an interest margin of 175 basis points, or 1.75 percentage points, more than benchmark rates for a one-year facility denominated in dollars, the people said. It’s proposing to pay a 195 basis- point margin for a one-year loan in the Chinese currency and 235 basis points for a three-year dollar deal.

Seth Pietras, a Geneva-based spokesman for Gunvor, declined to comment on the details of the financing.

The company obtained an $850 million loan last year that paid interest margins of 185 basis points to 260 basis points more than benchmark rates, according to data compiled by Bloomberg.

Gunvor also has a $1.5 billion revolving credit facility raised in Europe, and obtained about $1.2 billion of borrowing- base facilities to back trading operations in the past year, according to the statement.

--With assistance from Andy Hoffman in Geneva.