The banks have been invited to participate in bilateral transactions providing 10-year loans priced at 50 basis points (bp) over Libor. Bids are due in by the end of June. It is understood that Dubal is aiming to raise about $900 million through the signing of a string of bilateral borrowings.

'It'll be cogitating over what the banks have had to say and looking at lining up tentative commitments. We can expect movement in early July,' says an international banker looking at the transaction. 'Although the terms look very tight, Dubal is arguably one of the strongest credits in the GCC: it has fantastic cash flow and revenue streams.'

Dubal is one of the few companies in the Gulf that can access low-cost finance for major projects through bilateral corporate structures. 'It certainly has a strong balance sheet, but for some of the international banks the real interest is in the ancillary business,' says another banker. 'The interest rate hedging, the performance bonds and the foreign exchange mandates are very attractive and make up for the pain of lending long at sub-market rates.'

Borrowing for the Kestrel project on a bilateral basis is not a departure for Dubal. About $525 million was raised on a similar basis in 1998 for the Condor expansion programme.

Among the banks understood to be interested in the current transaction are National Bank of Abu Dhabi, National Bank of Dubai, Barclays Capital, Citibank, Credit Agricole Indosuezand HSBC Investment Bank.

Dubal's Kestrel project will lead to a 174,000-tonne-a-year (t/y) expansion of its capacity, bringing total capacity to710,000 t/y. Also under examination is the much larger Heron expansion programme, which, if initiated, will add 350,000-400,000 t/y at its Jebel Ali complex (MEED 24:5:02).