Arabtec team agrees $1.1bn loan for Bahrain project

27 March 2016

Dubai-based Mashreq has led project finance deal for Bahrain airport expansion

A joint venture of Arabtec, the UAE’s biggest-listed contractor, and Turkey’s TAV has agreed to raise a AED4bn ($1.1bn) loan from a group of regional financial institutions to help it finance the construction of Bahrain’s new airport terminal.

Dubai-based Mashreq, the oldest lender in the UAE, has led the project finance transaction, according to two people familiar with the matter. The deal has been finalised and is due for imminent closure, the sources said, asking not to be identified as the talks are private.

Several Bahraini banks have also participated in the facility, according to one of the sources. Mashreq has separately extended a AED250m short-term loan to Arabtec, according to the second source.

A Mashreq spokesperson declined to comment. Steven Salo, Arabtec’s head of investor relations said it is company policy not to comment on market speculation.

A consortium of Arabtec, TAV and Athens-headquartered contractor Consolidated Contractors Company (CCC) is already building Abu Dhabi’s $2.9bn Midfield Terminal Building. Mashreq was part of the financing deal, and extended a AED4bn loan for the project. The UAE’s Al-Hilal Bank, First Gulf Bank, Mashreq and Union National Bank co-led the transaction, which was coordinated by Mashreq, while Jordan’s Arab Bank acted as the lead arranger.

Contract award

The Arabtec-TAV joint venture won the Bahrain airport expansion contract in January, and the work is due for completion by 2020. Roughly 70 per cent of the scheme is being funded by the GCC Fund, primarily by Abu Dhabi Fund for Development (ADFD), with the rest being provided by the Bahraini government.

Designed with a capacity to handle 14 million passengers annually, the new airport in Bahrain will enable the kingdom to offer better services for the next 15 to 20 years, Transport Minister Kamal bin Ahmed Mohammed told MEED in February. The existing terminal will be demolished starting in 2019, when 80 per cent of the expanded airport is completed. Until then, continued refurbishment will be undertaken.

The sustained increase in passenger traffic at Bahrain International and the limited land area in which the new airport can expand to accommodate future demand mean the next location will be at sea, specifically in the northern part of Bahrain.

Mohammed confirmed that a study has been conducted to identify the location of the future terminal.

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