First, the group of mandated lead arrangers has been expanded. The original banks behind the IP bid were: HSBC, Gulf International Bank, Bank of Tokyo-Mitsubishi, ING, Sumitomo Mitsui Banking Corporationand West LB (MEED 31:1:03). They have been joined by National Bank of Abu Dhabiand First Gulf Bank. It is understood that at least one, if not more, regional banks will also join before the syndication is brought to market.

‘This is going to be one of the biggest financing deals this year and the bigger the lead arranging group, the smaller the syndication risk becomes,’ says one of the lead arrangers. ‘Such considerations become even more important with the timing risks involved. We want to be able to get the deal done even if it’s in syndication when a war in Iraq starts.’

Further security is likely to come from the inclusion of an Islamically-structured tranche. Bankers say plans are being drawn up for a $250 million facility arranged by Abu Dhabi Islamic Bank, Kuwait Finance Houseand Dubai Islamic Bank. Although regional liquidity remains strong, the inclusion of the Islamic tranche will be an important component in plans to reduce syndication risk.

‘There will also be other features on the package relating specifically to the acquisition component of the project,’ says the banker.

Pricing patterns are expected to take the financing for Abu Dhabi’s Shuweihat IWPP as their benchmark. The conventional tranche of that transaction had a step-up pricing structure, starting at 110 basis points (bp) over Libor for the pre-completion phase, before rising to 115 bp up to year seven, to 125 bp from years eight to 10 and rising in steps thereafter to 175 bp from year 16 to maturity (MEED 14:12:01).

The IP consortium, which includes Japan’s Mitsui & Companyand Tokyo Electric Power Company (Tepco), has been in pole position for the brownfield project since it submitted in mid-November the highest offer for the existing Umm al-Nar plant. Its acquisition price of AED 3,699 million ($1,008 million) was considerably higher than the AED 2,460 million ($670 million) offer from TotalFinaElf.

The IP group is expected to sign the power and water purchase agreement in early March.

Umm al-Nar will be Abu Dhabi’s fourth IWPP. ADWEA is being advised on the project by Credit Suisse First Boston, Germany’s Fichtnerand the US’ White & Case(MEED 21:9:01).