Abu Dhabi’s Emirates Steel Industries is preparing to launch the long-term project financing for its plant at Taweelah by the end of April, according to sources close to the project.

In mid-April, banks were asked to sign confidentiality agreements as a precursor to the launch of the detailed project finance loan to the bank market. One banker looking at the project says the long-term financing could be between $1.3-1.5bn and have a tenor of 10 years.

Emirates Steel is being advised by France’s Natixis, which also arranged a $700m bridging loan that will mature in August 2010. The maturity of that facility means Emirates Steel has a tough deadline by which to get the longer term financing in place. Emirates Steel and its adviser had hoped to launch the long-term financing before the end of March (MEED 2:1:10).

The long-term financing is expected to include tranche with guarantees by Italian export credit agency Sace.

The bridge loan was put in place in May 2008, but had to be extended in November 2009 because of the continued difficulties in the project finance market at the time. An additional $500m of funding from General Holding Corporation, the parent of Emirates Steel, has been provided for the development of the plant.

When the new financing is put in place this year, it will replace both the General Hold Corporation funding and the bridge loan.

A UAE-based banker involved in the project says a large group of banks are being approached about the deal, and not just the lenders in the bridge facility. The bridge loan was provided by National Bank of Abu Dhabi, Union National Bank and First Gulf Bank, all local. The international banks included Bahrain’s Arab Banking Corporation, Qatar’s Al-Khaliji, its subsidiary BLC Bank (France), India’s Bank of Baroda, the UK’s HSBC, France’s Natixis and Germany’s HVB/Unicredit Group.

Steel prices
Rebar prices ($ per tonne)
1 March 2008 840
1 April 2008 1025
1 May 2008 1160
1 June 2008 1370
1 July 2008 1540
1 August 2008 1385
1 September 2008 1050
1 October 2008 700
1 November 2008 440
1 December 2008 460
1 January 2009 485
1 February 2009 510
1 March 2009 420
1 April 2009 455
1 May 2009 495
1 June 2009 455
1 July 2009 485
1 August 2009 505
1 September 2009 510
1 October 2009 505
1 November 2009 475
1 December 2009 490
1 January 2010 510
1 February 2010 535
1 March 2010 545
15 March 2010 590
Source: MEsteel