First Energy to cut stake in Saudi silicon plant

17 November 2009

Bank in talks with potential investors over financing of 7,500-tonne-a-year polysilicon facility

Bahrain’s First Energy Bank is seeking to cut its equity stake in a planned 7,500-tonne-a-year polysilicon plant in Saudi Arabia from 36 per cent to less than 20 per cent.

Vahan Zanoyan, chief executive officer of First Energy tells MEED the bank plans to appoint a financial adviser by the end of November to help it sell the equity and raise the debt for the scheme.

Under its plans, equity investors will provide 40 per cent of the finance for the plant, to be built in Jubail on Saudi Arabia’s east coast, and debt investors the remaining 60 per cent.

“In five months, we expect to have more of an idea of who our equity partners in the project will be, and in the next two months we will have more of an idea on the sources for the project debt,” says Zanoyan.

The equity investors will consider floating the project company, Saudi Polysilicon, on the Saudi Stock Exchange (Tadawul) once the plant begins producing commercial quantities of polysilicon in 2013.

“Listing in Saudi Arabia is an option, as these kinds of projects have done very well in general when floated,” says Zanoyan.

First Energy has held talks with the Saudi Industrial Development Fund and Saudi banks about lending money to build the plant.

“We think there will be a lot of interest from Saudi investors in this scheme and plan to start making our initial talks with banks and other investors more concrete over the next few months,” says Ramzi al-Sewaidi, head of investment banking at First Energy.

The bank is seeking to borrow most of the money in the form of sharia-compliant loans with 10-year tenors.

The length of the loans matches Saudi Polysilicon’s offtake agreement with US petrochemicals firm Vinmar, which has agreed to buy all of the plant’s polysilicon to supply its Europe plants, which manufacture solar panels.

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