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Petronas to purchase Italian lubricant maker

By Denise Kee / Bloomberg News

SINGAPORE: Petroliam Nasional, the state oil company in Malaysia, plans to borrow €800 million, or $1.1 billion, to buy Italian lubricant maker FL Selenia from Kohlberg Kravis Roberts, according to a banker familiar with the deal.

Petronas, as the company is known, has hired its adviser, Dresdner Kleinwort, the investment-banking unit of Allianz, to arrange the 364-day loan, according to the banker, who declined to be identified before a public announcement. Petronas will decide on the longer term funding plan later, the banker said. Azman Ibrahim, a spokesman for the firm, did not return telephone messages.

Petronas is getting the one-year loan instead of committing to longer-term funding as the cost of borrowing euros for three months held near the highest in more than six years. The European Central Bank said Friday in its quarterly survey that banks were likely to remain unwilling to lend in the next quarter.

Dresdner Kleinwort is selling the loan to other banks, offering them an all-in pricing, including fees and interests, of 22 basis points, according to the banker. A basis point is 0.01 percentage point.

"The absolute yield they are paying is not high," said Jeffrey Yap, a credit trader at Rabobank International in Hong Kong. "It is quite prudent of them to get a bridge loan and decide on the longer term funding later given the uncertainties in the credit markets now."

Petronas will pay an interest margin of 7.5 basis points more than the Euribor for the first four months. The interest margin will increase to 10 basis points for the next four months and to 12.5 basis points for the last four months, according to the banker. Three-month Euribor, or the Euro interbank offered rate, and a benchmark for borrowing costs, was at 4.775 percent on Friday.

Investors demand a premium of 114 basis points on Petronas 7.75 percent bonds maturing August 2015 more than the U.S. Treasuries of similar maturity or a yield of 5.5 percent, according to Deutsche Bank. Petronas has a total debt of $10 billion comprising loans and bonds, according to Bloomberg data.

KKR bought the maker of lubricants from Vestar Capital Partners, a buyout firm, for €835 million at the end of 2005. FL Selenia has more than 15,000 customers with product ranges including transmission and engine fluids for trucks, automobiles and tractors. The sale to Petronas was announced on Sept. 20.

The loan will be by a unit of Petronas butMalaysian oil company has spent more than $1.4 billion buying assets in Europe and Australia this year. Petronas is rated A- by Standard & Poor's and two levels higher at A1 by Moody's Investors Service.

Petronas to purchase Italian lubricant maker

By Denise Kee / Bloomberg News

SINGAPORE: Petroliam Nasional, the state oil company in Malaysia, plans to borrow €800 million, or $1.1 billion, to buy Italian lubricant maker FL Selenia from Kohlberg Kravis Roberts, according to a banker familiar with the deal.

Petronas, as the company is known, has hired its adviser, Dresdner Kleinwort, the investment-banking unit of Allianz, to arrange the 364-day loan, according to the banker, who declined to be identified before a public announcement. Petronas will decide on the longer term funding plan later, the banker said. Azman Ibrahim, a spokesman for the firm, did not return telephone messages.

Petronas is getting the one-year loan instead of committing to longer-term funding as the cost of borrowing euros for three months held near the highest in more than six years. The European Central Bank said Friday in its quarterly survey that banks were likely to remain unwilling to lend in the next quarter.

Dresdner Kleinwort is selling the loan to other banks, offering them an all-in pricing, including fees and interests, of 22 basis points, according to the banker. A basis point is 0.01 percentage point.

"The absolute yield they are paying is not high," said Jeffrey Yap, a credit trader at Rabobank International in Hong Kong. "It is quite prudent of them to get a bridge loan and decide on the longer term funding later given the uncertainties in the credit markets now."

Petronas will pay an interest margin of 7.5 basis points more than the Euribor for the first four months. The interest margin will increase to 10 basis points for the next four months and to 12.5 basis points for the last four months, according to the banker. Three-month Euribor, or the Euro interbank offered rate, and a benchmark for borrowing costs, was at 4.775 percent on Friday.

Investors demand a premium of 114 basis points on Petronas 7.75 percent bonds maturing August 2015 more than the U.S. Treasuries of similar maturity or a yield of 5.5 percent, according to Deutsche Bank. Petronas has a total debt of $10 billion comprising loans and bonds, according to Bloomberg data.

KKR bought the maker of lubricants from Vestar Capital Partners, a buyout firm, for €835 million at the end of 2005. FL Selenia has more than 15,000 customers with product ranges including transmission and engine fluids for trucks, automobiles and tractors. The sale to Petronas was announced on Sept. 20.

The loan will be by a unit of Petronas butMalaysian oil company has spent more than $1.4 billion buying assets in Europe and Australia this year. Petronas is rated A- by Standard & Poor's and two levels higher at A1 by Moody's Investors Service.