'They are doing it themselves, without a financial adviser and they are kicking along,' says one of the bidders. 'A group will be mandated in early October. They'll almost certainly go for a club deal. The question revolves around how many banks they can get in at the pricing they want. It will end up as a mainly Saudi club with a couple of regionals.'
It is expected that the deal will have a tenor of about 12 years. It will be used to refinance existing loans and will also contain fresh borrowing. About $225 million will be used to replace a $305 million facility signed in 2001, which was itself a refinancing of an original facility, signed in 1997, for the part-financing of a petrochemicals facility in Jubail (MEED 11:5:01; 14:3:97). The remaining $245 million will be fresh finance for SCPC (MEED 25:7:03).
'The margin should end up in the 110-120-bp [basis points over Libor] range,' says another bidder. 'But we'll find out soon enough how hard they're going to squeeze it.'
In the 2001 refinancing, the tenor of the original eight-and-a-half-year loan was stretched by 18 months and the margin was tightened to 100 bp from 112.5 bp. A number of international banks left the transaction at this point.
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