Abu Dhabi’s Emirates Steel will sign an extension to its $700m bridging loan on 1 October after securing commitments from at least four additional banks.
The deal will extend the maturity of the $700m loan provided by seven banks in May 2008, until August 2010 from November 2009. According to sources involved in the process, the loan will be increased in size.
“There are several new banks joining the loan which has enabled it to be increased in size, while also reducing the commitments of some of the existing lenders,” says a banker close to Emirates Steel.
In early September, Emirates Steel signed the final construction contract for the expansion of its plant at Mussafah in Abu Dhabi with Italy’s Danieli Corporation. All the construction contracts are in place and following the completion of the bridge extension, work on raising long-term debt of about $2bn will begin.
“Banks will be approached about long-term funding for the project in the first quarter of 2010, with a view to complete the fundraising by the second quarter,” says the banker. “We could not start work on long-term financing while the contractor on the project was unknown.”
The original bridging loan was financed by the UK’s HSBC, France’s Natixis, Abu Dhabi’s National Bank of Abu Dhabi and Union National Bank, Bahrain’s Arab Banking Corporation, Japan’s Mizuho, and Germany’s HVB/Unicredit Group. Only one bank in the original group has withdrawn from deal.
Emirates Steel is being advised by Natixis.