Nine commit to Al-Ezzal debt

07 August 2004
A total of nine international and regional banks replied positively to invitations to join the lead arranging group on the commercial debt package for Al-Ezzal Power Company. They will be joining HSBCand Societe Generale, the two banks backing the winning bid submitted by Belgium's Tractebeland Kuwait-based Gulf Investment Corporation (see Power & Water, page 19).

The facility is split between a $373 million term loan and a $125.7 million equity bridge loan.

'We are assuming the group will be mandated within days,' said one of the bankers in early August. 'The strong response means there will be no general syndication. The lenders have got what they wanted: a club deal.'

Among the interested banks are understood to be Ahli United Bank, ANZ Investment Bank, Bayerische Landesbank, Calyon, Gulf International Bank, KBC Bank, National Bank of Bahrainand Standard Chartered Bank.

The 20-year debt facility - one of the longest tenor transactions to be completed in the Gulf - has a step-up pricing structure which starts at 120 basis points (bp) over Libor for the three-year construction period, drops to 110 bp for years four-nine, rises slightly to 115 bp for years 10-12, then more steeply to 150 bp for years 13-15, to 160 bp for years 16-18 and finally to 175 bp for years 19 and 20.

The three-and-a-half-year equity bridge loan has a margin of 40 bp over Libor.

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