Bapco finance shapes up

16 July 2004
The lead arranging group for the commercial debt tranche of the multi-tranche financing package for Bahrain Petroleum Company (Bapco)is expected to be mandated by early August, sources close to the deal say.
The lead arranging group for the commercial debt tranche of the multi-tranche financing package for Bahrain Petroleum Company (Bapco)is expected to be mandated by early August, sources close to the deal say.

The overall package is expected to be worth about $650 million, and part of it will take out the $150 million, receivables-backed one-year bridge facility provided by BNP Paribasand HSBC. These two banks are now acting as the structuring agents on the entire facility at the request of the Ministry of Finance & National Economy, although Bapco continues to be the client (MEED 4:6:04).

The banks that bid for the original financing package are expected to be invited into the commercial tranche. They are Arab Banking Corporation, Arab Petroleum Investments Corporation, Bank of Bahrain & Kuwait, Gulf International Bankand National Bank of Bahrain.

'We are looking at a 12-year deal with pricing starting at about 90 bp [basis points over Libor] pre-completion, stepping up to about 110-120 bp,' says a banker.

Bankers say that discussions have reached an advanced stage with the Japan Bank for International Co-operation for a $150 million loan, and a further $150 million tranche could come with cover from Nippon Export & Investment Insurance (Nexi).

A $200 million, Islamically-structured facility is also being put together. It is expected that Kuwait Finance Housewill provide $100 million, with the remaining $100 million possibly coming from a consortium comprising Abu Dhabi Islamic Bank, BNP Paribas, HSBC and the Islamic Development Bank.

'There is a possibility that the deal could be increased in size to $800 million or more, depending on whether Bapco receives approvals for plans to go ahead with the desulphurisation and other bolt-on contracts,' says the banker. 'The picture should be clear by September.'

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