UPS has raised RMB 630 million ($99 million) in a pioneering financial move to fund Chinainvestment and formally applied to the European Commission for clearance of its planned €5.16
billion acquisition of TNT Express.UPS said it has become the first foreign non-financial company to issue a commercial paper inHong Kong’s offshore renminbi market, creating a new financial vehicle to fund growth projects inChina. The issuance on June 15 raised RMB 630 million ($99 million) and was part of its overall €1billion commercial paper programme.
“The offshore deliverable Renminbi market has experienced rapid development since China startedpromoting the use of its currency in international transactions,” said Andy Dolny, UPS’s treasurerand chief investor relations officer. “Companies like UPS can leverage this liquid short-datedCNH money market as an alternative means of funding investments in China.”
“This CNH initiative will give UPS more flexibility in payment, collection and futureinvestments in China, ultimately enabling our clients’ businesses to respond more effectively toexpanding trade lanes with international markets,” added recently-appointed UPS Asia Pacific RegionPresident Brendan Canavan. “UPS’s issuance of CNH-denominated commercial paper, together withour existing direct investment program in China, reflects our long-term commitment in supportingthe continued internationalisation of China’s currency and business environment.”
China is UPS’s largest growth market and the company has been investing significantly in itstechnology and logistics infrastructure there since 2002. To date, more than US$1 billion has beeninvested in the market, including two major air hubs in Shanghai and Shenzhen, and UPS now servesmore than 330 cities in China.
Meanwhile, Reuters reported that UPS formally notified the European Commission last Friday ofits planned €5.16 billion acquisition of TNT Express. The EU competition watchdog said it willdecide by July 20 whether to approve the acquisition or open an in-depth investigation. UPSexecutives have said they expect Brussels to approve the deal in a short ‘Phase 1’ review, clearingthe way for the deal to go through in Q3 this year.
There has been speculation, however, that UPS may have to make concessions by disposing of someparts of TNT. It has already been confirmed that ownership of Liege-based TNT Airways will need tobe transferred to a EU-based owner to avoid a loss of bilateral traffic rights.
