Bids in on Sohar refinery debt

17 April 2003
Nine banks are understood to have submitted proposals for the lead arranging mandate on the proposed $1,230 million multi-tranche financing for Sohar Refinery Company (SRC).

The bidders are understood to be: Arab Bank, ANZ Investment Bank, Bank of Tokyo-Mitsubishi, BNP Paribas, Gulf International Bank, HSBC, Mizuho Financial Group, Societe Generaleand Sumitomo-Mitsui Banking Corporation. A 10th bank was expected to submit a bid in mid-April, while another institution has indicated that it may come in at a lower level. In total, 14 banks received the preliminary information memorandum (PIM).

Sources close to the transaction say that, based on the responses, there has been a healthy oversubscription at the underwriting level. Negotiations with the banks are ongoing, with the intention that a lead arranging group will be appointed by mid-2003. Financial close is expected by the end of the year.

The banks were invited to bid for a hybrid banking package made up of four tranches. The first is a 14-year commercial tranche worth $593.8 million, the second a $261.9 million facility for which political risk and possibly commercial risk cover is being provided by Nippon Export and Investment Insurance (Nexi). The third is a $111 million standby facility from which drawdowns can be made in the event of cost overruns or for working capital requirements.

It is understood that the standby facility will have a much shorter tenor than the other tranches, probably only covering the construction period. The fourth tranche is a $261.9 million loan from the Japan Bank for International Co-operation (JBIC).

Bank of Americais acting as the financial adviser to SRC.

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