Marafiq seeks responses for $667m loan deal

12 May 2010

Saudi utility tests appetite of local banks with 15-year deal

Power & Water Utility Company for Jubail & Yanbu (Marafiq) has begun contacting banks to raise a SR2.5bn ($667m) loan that will have a tenor of 15 years.

Bankers in Saudi Arabia say the deal was launched in early May and Samba, which is acting as financial adviser on the deal, has requested that banks respond with financing offers before the end of the month.

Marafiq is hoping to close the deal before Ramadan begins in August. However, bankers say the long tenor on the deal may impact response. One local banker says, “It is a long time to hold exposure to Marafiq, especially with the question of ownership hanging over the company.”

Marafiq is expected to be listed on the Saudi Stock Exchange (Tadawul) at some point in the future, changing it current shareholders from Saudi state-owned firms including Saudi Aramco, Saudi Basic Industries Corporation, and the Public Investment Fund (PIF). Sources close to the deal say lenders will take comfort from the stability of receivables at Marafiq from the payment of utility bills.

The launch of the deal has come sooner than many bankers were expecting, with earlier indications being that Marafiq would not launch the deal until later in the summer.

The utility has plans to develop two new power plants at Yanbu.

A MEED Subscription...

Subscribe or upgrade your current 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