Maaden tables pricing for smelter project

23 June 2010

Aluminium project targets July financial close

Saudi Arabian Mining Company (Maaden) has set pricing for loans on its $10.8bn aluminium smelter project and has given banks until 28 June to respond with how much they plan to commit to the project.

The pricing has been set at 165 basis points above the Saudi interbank offered rate, rising to 205 basis points following construction then, from the fifth year onwards, rising to 245 basis points. The dollar loans are more expensive, starting at 205 basis points above the Saudi interbank offered rate, rising to 245 basis points post construction, and 275 basis points from year five onwards.

The total commitments received was around two times the total size of the debt financing being sought when banks provided their initial responses to the request to fund the project by 7 June, says a source close to the project . Pricing was sent to the banks on 22 June.

The debt requirements total $7.5bn, split between $5bn for the aluminium smelter and $2.5bn for an aluminium rolling mill. The UK’s Standard Chartered and the local Riyad Bank are acting as financial advisers on the deal (MEED 24:5:10).

The majority of funding for the scheme is expected to come from the local banks lending in riyals.

“Although the sponsors have a preference for dollars, the higher margins on the dollar loans means that their preference is limited,” says one banker close to the deal.

Maaden is developing the project in a joint venture with US-based aluminium company Alcoa, which will have a 40 per cent stake in the partnership, split equally between itself and other investment partners. Alcoa and its partners will invest $900m over four years.

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