Blake Dawson Waldron advised Orica and Exxon Mobil on the sale of their 50/50 plastics joint venture Qenos. The companies sold Qenos to state-owned diversified chemicals company China National Chemical Corporation.
The decision to sell was made after Qenos posted a series of losses, partly as a result of rising input costs. BDW partner Peter Stirling said dealing with a “major Chinese multinational” added interesting and challenging aspects to the deal.
“There were aspects of the transaction that were of concern to them, on which they focus, that we wouldn’t normally focus on, and vice versa,” he said, but most of these issues were worked through with no difficulties.
The transaction itself was a “reasonably complex business”, with some environmental aspects to deal with. “From a legal perspective there were quite a few issues to get through, and it took a bit of time dealing with those,” Stirling said.
The fact that Qenos was a joint venture also added to the challenge. “We had two [sets of] shareholders’ interests to deal with, together with the concerns of China National Chemical Corporation, so the multi-party aspect was most challenging.” The transaction was conducted through a trade sale process, and “necessarily took a long time” because of significant interest from industry players and private equity funds.
The deal still requires approval from the foreign investment review board and the People’s Republic of China Government.
China National Chemical Corporation was advised by Corrs Chambers Westgarth in Sydney and Skaddens in Beijing.