Sinochem in early talks to finance Potash bid: report

Sinochem, which has hired Citigroup and Deutsche Bank to explore options to foil BHP's bid, was not actively searching for cash, but it was entertaining loan proposals from global and Chinese banks, the South China Morning Post reported.

"We are talking to Sinochem about a big loan. They need to put financing in place, so that if they decide to make an offer, they can convince Potash's board they are good for the money," the newspaper quoted a managing director at a mainland bank.

The newspaper did not name the banker.

Last month, BHP launched a hostile $130-a-share offer for Potash , the world's largest fertilizer maker. The Saskatoon, Saskatchewan-based company flatly rejected the bid as "grossly inadequate" and has filed a lawsuit against BHP in an attempt to stymie a takeover.

Interest in Potash is being fueled by an expected surge in fertilizer demand from China, India and other emerging economies due to rising food consumption.

Sinochem could not be reached for a comment immediately. BHP has received antitrust clearance from the U.S. Federal Trade Commission to proceed with its bid.

"We have approached Sinochem about lending very substantial amounts to support this potential deal. They are interested, but have made no firm commitments," the newspaper also quoted another unnamed banker as saying.

Potash's U.S.-listed shares gained 0.4 percent to close at $146.00 on Friday, representing a 12.3 percent premium to BHP offer price.

(Reporting by Denny Thomas; Editing by Nick Macfie)

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