Mostorod refinery scheme to go back to banks

26 January 2012

Egyptian refinery project takes on new shareholders and targets financial close by March

The Egyptian Refining Company (ERC) is preparing to approach lenders on the $3.7bn Mostorod refinery project with a revised structure for the deal, after new shareholders have agreed to join the financing arrangements.

ERC hopes it will be able to bring the financing for the project to a close by the end of March, after political upheaval in Egypt delayed plans to complete the funding agreements in January 2011.

Sources close to the refinery say the banks that agreed to finance $2.6bn of debt on the project will be asked to reaffirm their commitments in the next few weeks. Banks signed commitments to the project in late 2010 and ERC has continued to pay commitment fees to keep them in place, but new shareholders have now joined the project, requiring banks to agree to a new structure on the financing.

New shareholders have now joined the project, requiring banks to agree to a new structure

Potential new shareholders in the public and private sectors were approached in 2011 to join the equity investors, which includes privately held Citadel Capital and the state-owned Egyptian General Petroleum Corporation. Those negotiations are understood to have now been completed with new several new investors joining the project.

“There are a few changes to the structure, because of new equity investors and delays to the project, but the amounts are not changing,” says one source involved in the project.

Prior to the collapse of President Hosni Mubarak’s regime in 2011, four state-owned firms were awaiting final approval from the government of plans to take an equity stake in Mostorod. They have since had to approach the transitional government for new approvals of the investments, a process that has been mired in delays.

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