Shell seeks $7 billion credit facility ahead of BG deal

Royal Dutch Shell is seeking to secure a $7 billion credit facility in North America as back-up for its $70 billion acquisition of BG Group.

US bank JP Morgan Chase is arranging the facility, which will involve up to 20 banks and institutional investors.

The facility will be used as a “back-up” for funds already raised to finance the deal.

At the end of the third quarter, Shell held $31 billion in cash on its balance sheet, enough to cover the cash component for the BG acquisition which was set at 383 pence per BG share when the proposed merger was announced on April 8.

The Anglo-Dutch company oil and gas company hopes to complete the acquisition by early 2016 which will transform it into the world’s top liquefied natural gas (LNG) trader and a leading offshore oil producer.

The proposed merger has already received mandatory approvals from regulators in Brazil, the European Union and Australia and still awaits a green light from China, which is expected to decide by January 5.

Shell plans to sell $30 billion worth of assets between 2016 and 2018 to help finance the deal, buybacks shares and maintain the company’s dividends through an extended period of low oil prices.

In May, Shell agreed on a $15.28 billion bridge loan from a group of banks, also to back the deal.