Equate refinancing gets warm response

26 October 2001

For all the difficulties facing regional deals, bankers and borrowers alike will take comfort in the strong appetite shown for the refinancing of a $900 million multi-tranche facility for Kuwait's Equate Petrochemical Company.

'This is a very attractive deal, and the chances are that it will be oversubscribed,' says a regional banker looking at the transaction. 'They've launched it quickly, and are aiming to get it closed by the end of November. For international banks it has rarity value - not many deals come out of Kuwait - and the local banks are very liquid and keen to take big positions in the facility.'

The deal has been divided into three tranches. The first two - a five-year, $300 million revolving credit facility, and a 10-year, $400 million term loan - are being lead arranged by National Bank of Kuwaitand Citibank(MEED 26:10:01). The third, a $200 million, 10-year Islamically structured leasing facility, is being lead arranged by Kuwait Finance House. It is understood that it is being done on a 'best effort' basis, rather than being underwritten.

Bankers say that, although the transaction has been opened to new institutions, the fact that some of those likely to participate were involved in the original deal and are simply extending their exposure will make it far more digestible.

The deal has a spread of 80 basis points (bp) over Libor, unchanged on the spread offered on a previous refinancing completed in late 1997 (MEED 26:9:97).

There is a commitment fee of 30 bp for the revolving facility. Banks have been asked to commit to the two conventional tranches on a pro-rata basis. Participants at the co-arranger level are being offered 45 bp for $50 million tickets across the two conventional tranches. At the lead manager level they are offered 35 bp for $30 million tickets and at the manager level 25 bp for $20 million tickets.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications