Presentations have been made to interested banks in Dubai and London, and it is expected that credit committees will reach final decisions on the deal by mid-November. ‘We would anticipate ending up about the middle of the bid/offer spread of $200 million-400 million,’ says a banker close to the transaction. ‘A lot will come from the Gulf, but we expect a number of Benelux institutions will be attracted by the limited recourse tranches.’
There are two limited recourse tranches, entailing upfront disbursement, and a third tranche with disbursement deferred for 55 months with full recourse to Sabic. The first, worth Eur 408 million ($399 million), will be used by Sabic as the base equity for the acquisition vehicle. It has been priced at 55-65 basis points (bp) over Libor. The second, for Eur 820 million ($804 million), is made up of four different layers with varying levels of recourse to Sabic, and has been priced in a range of 110-175 bp.
The Eur 1,125 million ($1,100 million) deferred tranche is covered by a bank guarantee supporting Sabic’s commitment to pay the remainder of the acquisition’s value in four and a half years. It is priced at 70-80 bp.
There is a relatively large lead arranging group, comprising JP MorganChase & Company, HSBC Investment Bankwith its local affiliate The Saudi British Bank, Credit Agricole Indosuezwith its local affiliate Al-Bank Al-Saudi Al-Fransi, Saudi American Bank, Arab Bankwith Arab National Bank, Arab Petroleum Investments Corporation (Apicorp), Arab Banking Corporationand Gulf International Bank. The sub-underwriters are Riyad Bank, Saudi Hollandi Bank, National Bank of Abu Dhabi and ING Bank.
JP Morgan is the financial adviser on the transaction.