Bank of Tokyo-Mitsubishi to mediate over Kayan financing

08 February 2009
Bank of Tokyo-Mitsubishi is to mediate between Saudi Basic Industries Corporation (Sabic), the Saudi Industrial Development Fund (SIDF) and the commercial lenders on the Saudi Kayan petrochemicals project, to resolve concerns raised by the SIDF.

The fund’s concerns include the terms of the gas allocation agreement and the commercial funding for the Kayan project.

Sabic holds 35 per cent of the equity in the $10bn Saudi Kayan petrochemicals project. A further 45 per cent is floated on the Saudi stock market (Tadawul), with the remainder held by the local Al-Kayan Petrochemical Company.

The SIDF is to provide a $530m loan to the scheme.

MEED understands that dates for the initial meetings are being arranged. “It is likely that the concerns raised will take a while to be resolved,” one banker close to the deal tells MEED.

If the concerns are not allayed, the SIDF could withdraw its funding, although Sabic has already said it would step in to fill the gap if that happens.

However, industry sources in the kingdom expect that an agreement between the developers and commercial lenders will be reached.

Financing for the Kayan project closed in mid-2008 and construction on the project is under way.

The Jubail-based Saudi Kayan complex will be the largest single-phase integrated petrochemicals project ever built. It will produce more than 6 million tonnes a year of chemical products.

Sabic could not be reached for comment.

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