Emirates Steel Industries is aiming to complete a $1.5bn financing before mid-August to avoid having to seek another extension to a $700m loan that is due to be repaid.

The company has put in place a bank group for the $1.5bn loan and is currently finalising documentation. One source close to the deal says, “There is not a lot of work left to be done on the documentation of the new deal, but if it is not done in time they will have to get another extension to the bridge loan.”

A source close the company confirms that bank commitments are all in place and the deal is progressing towards financial close.

The $1.5bn financing is split between a $733m commercial loan provided by Abu Dhabi’s Union National Bank, National Bank of Abu Dhabi, and First Gulf Bank. India’s Bank of Baroda, Bahrain’s Arab Banking Corporation, Qatar’s Al-Khaliji, and its subsidiary BLC Bank (France). The UAE banks are providing loans denominated in dirhams, while the rest of the banks are funding the loans in dollars. The company is also raising a $600m working capital facility form the lenders.

A $367m Islamic loan is being provided by two UAE-based banks, Abu Dhabi Islamic Bank and Al-Hilal, with an additional tranche of around $500m tranche, from Italian export credit agency (ECA) Sace and funded by a group of international banks. France’s Natixis is acting as financial adviser to Emirates Steel. The Sace-covered loan will be used to repay General Holding Corporation (GHC), the parent company of Emirates Steel, for additional cash that it has put into the steel production facilities at Mussafah.

Natixis put in place the $700m bridge loan in May 2008, hoping that by its maturity in November 2009, the banking market would have recovered from the impact of the financial crisis. The lack of appetite for project finance deals continued and Emirates Steel was forced to extend the repayment of the bridge loan in October 2009.