The financing process for the raft of petrochemical schemes under way in the kingdom is accelerating, with several deals out in the market and the appointment of mandated lead arrangers (MLAs) nearing on two major projects.
The financing process for the raft of petrochemical schemes under way in the kingdom is accelerating, with several deals out in the market and the appointment of mandated lead arrangers (MLAs) nearing on two major projects. Bids are due by mid-December on the financing of the Al-Waha polypropylene and propane dehydrogenation project at Jubail being developed by the local Sahara Petrochemical Company. The project will be financed entirely Islamically and invitations are understood to have gone out to a range of local banks and to the Islamic windows of banks in Bahrain and the UAE. The sponsors are initially looking for about $500 million in commercial debt with a tenor of 10-12 years, which will potentially be reduced if funding is provided by the Public Investment Fund (PIF). HSBC with local affiliate Saudi British Bank (SABB)is acting as financial adviser. Bids are also due in mid-December for the financing of the phase 2 expansion of the Saudi International Petrochemical Company (Sipchem)plant at Jubail, entailing the addition of an acetyls complex. The project will be conventionally financed and will be of about the same tenor and value as the Al-Waha debt package, with the PIF again expected to extend funding. The project will be conventionally financed. HSBC and SABB are advising. The appointment of about 15 MLAs is due by the end of November on the financing of the Rabigh integrated refinery and petrochemicals complex being developed by Rabigh Refining & Petrochemical Company (PetroRabigh). An informal list has already been drawn up and roles assigned. The pricing on the 15-year deal, consisting of a $1,500 million conventional tranche and a $500 million Islamic portion, steps up from 35-65 basis points (bp). Japan Bank for International Co-operation (JBIC) is expected to provide $2,500 million and the PIF will extend about $1,000 million. Sumitomo-Mitsui Banking Corporationis the financial adviser (MEED 18:11:05). Banks are also awaiting the appointment of MLAs on the 10-year financing for the Eastern Petrochemical Company (Sharq)on its olefins complex at Jubail after the submission of bank bids in late October. It is understood that a smaller group of MLAs is likely to be appointed than the nine-11 originally envisaged after an additional funding commitment from the PIF, meaning that the $972 million in conventional funding initially sought will be reduced. The pricing is understood to be about 50 bp and tickets of $50 million, $75 million, $100 million and $150 million were offered, paying fees of 40 bp, 45 bp, 50 bp and 55 bp. Bank of Tokyo-Mitsubishiis advising (MEED 21:10:05). Due to come to market in late December or January is the financing package for the joint cracker project at Jubail, which will be shared by the local Tasnee Petrochemicals, Sahara, Sipchem and Europe's Basell. Total project costs are estimatedat $2,000 million and discussions are under way between the sponsors and export credit agencies ahead of the formal approach to banks, which have already received teaser documents. HSBC and SABB are advising (MEED 15:7:05).