Aluminium Bahrain (Alba) has invited banks to participate in a $750m syndicated loan for its sixth potline smelter expansion.

The loan will have a seven year term and an amortising structure. It is in US dollars with Islamic and conventional tranches depending on demand from banks.

MEED reported earlier in June that the syndication of the commercial tranche was imminent.

The financial advisers are the US’ JPMorgan and the local Gulf International Bank and National Bank of Bahrain.

The loan is expected to price somewhere in the region of 300 basis points over interbank rates, according to predictions by bankers.

The commercial bank tranche will be followed by an export credit agency (ECA) tranche of approximately the same size. The details of this tranche have yet to be finalised as its composition will depend on the suppliers selected for the projects.

There will also be a benchmark bond or sukuk (Islamic bond) issuance, and a smaller subordinated debt tranche to contribute to Alba’s equity investment.

The entire finance package for the $3bn project will be more than $2bn, with a debt to equity ratio of 70:30.

The aluminium company awarded the main engineering, procurement and construction management (EPCM) contract to the US’ Bechtel.

It has also shortlisted three bidders for the contract to build the 1,300MW fifth captive power plant at its aluminium smelter facility.

The project will make Alba the world’s largest single-site aluminium smelter, boosting the site’s production capacity by 540,000 tonnes a year (t/y) to 1.5 million t/y.

The budget was cut from $3.5bn to $3bn in response to low oil prices, Alba announced in May.

Several Bahraini state-owned companies are tapping the market to fund their projects, led by Oil and Gas Holding Company (Nogaholding).