Banks have been invited to submit bids for what is described as a lead arranging position. The stipulated minimum participation in the commercial part of the debt package is $25 million, the IM says.
The total facility is for $674 million, of which $320 million is made up of export credits and the remaining $354 million is straightforward commercial debt.
‘This is the first stage of the syndication and they are looking to get a sort of senior tier of underwriters in place,’ says an international banker close to the deal. ‘When this is in place they will go to general syndication, but the timeframe will remain flexible.’
The mandated lead arrangers on the transaction are ANZ Investment Bank, Arab Banking Corporationand BNP Paribas(MEED 8:3:02).
‘We are doing this deal on a ‘best effort’ basis and have not underwritten it,’ says one of the lead arrangers. ‘The borrower took the decision to take this route as it allows the process to be speeded up – all the debate over MAC [material adverse change] clauses is bypassed. Urgency is growing as the bids for the EPC [engineering, procurement and construction] contract expire at the end of May. There is not much time left.’
Attention has focused on the pricing of the deal. The commercial debt has a pre-completion margin of 175 basis points (bp) over Libor. This rises to 200 bp for the first five years after construction, and then to 235 bp for the last three-and-a-half years. The construction period is scheduled to last for 35 months, giving the commercial facility a door-to-door tenor of just under 11 and a half years. The export credit portion has a door-to-door tenor of just under 13 years.
‘Given the nature of the Indian offtaker it’s difficult to work out whether the margin is attractive or not,’ says another banker looking at the transaction. ‘What is very attractive – and this might prove decisive – is the offer of 150 bp of upfront fees being offered at this level. This could lure a few banks in.’
Two roadshows are to be staged: the first in London on 22 March and the second in Muscat on 25 March.
Banks have been given an 8 April deadline by which they must confirm their commitments and the final date for closing the financing and beginning drawdown has been set for 31 May.