Abu Dhabi-based Emirates Steel is looking to raise a $1.3bn facility from banks to refinance existing project finance debt that supported the expansion of its Mussafah plant.
Lenders have already submitted their proposals and are waiting for feedback from the borrower.
The funding will replace debt raised for the $1.9bn second-phase expansion of the plant.
The facility is expected to be arranged as a club deal rather than as a syndicated loan, says a banking source.
The original $1.1bn seven-year project financing was closed in 2010 via a group of seven conventional banks and two Islamic financial institutions.
Construction of the scheme was completed in September 2012.
As the expansion is operational, potential lenders to the facility will not need to deal with completion risk as is typical in most project finance transactions. The loan is likely to be structured as a hybrid between a project and corporate finance loan.
The expansion increased the Mussafah plants production capacity to 3.5 million tonnes a year. Emirates Steel launched its upgrade plans in January 2006, and completed the AED3bn ($816m) phase 1 in June 2009.
The company is set to benefit from a rebound in demand for steel in the region in the coming years. It reported an 8 per cent increase in revenues for 2013 on 16 February. Revenues reached AED6.5bn.
Saeed al-Romaithi, CEO of Emirates Steel, said demand for steel will be fuelled by the GCCs strengthening construction sector.
The multibillion-dollar infrastructure projects planned across the region will be the main driver and the cornerstone of the regions economic growth in the coming years, he said in an official release.
The World Steel Association (WSA) expects steel demand in the Middle East and North Africa (Mena) region to grow by 7.3 per cent to reach 69 million tonnes in 2014. Steel demand only grew by 1.7 per cent in 2012 and the WSA only expected a rise of 1.7 per cent in 2013.