CCB grants M&A loan to Baosteel Group

Mar. 5, 2009 (China Knowledge) - Baosteel Group, parent of China's largest steel maker, Baoshan Iron and Steel Co<600019>, obtained an M&A loan of RMB 800 million from the Shanghai branch of China Construction Bank (CCB)<601939><939>, one of the Big Four state-owned banks in China, sources reported.

The M&A loan will be used to finance Baosteel Group's acquisition of a 56.15% stake in Ningbo Iron&Steel Co Ltd (Ningbosteel).

A person who is familiar with the acquisition revealed that Baosteel Group will pay up to RMB 3.14 billion in order to accomplish the deal.

Baosteel Group has already obtained an RMB 750 million loan from the Shanghai branch of China's Bank of Communications (BoComm)<601328><3328>.

The company must finance the remainder of the purchase without seeking additional loans from commercial banks, which by law can only provide up to 50% of the funding for M&A moves.

An executive of Baosteel Group said the banks showed interest in funding the move and asked to provide the M&A loans.