Saudi Arabia power plant financing signed

21 June 2010

Independent power project expected to reach financial close on 22 June

Financing for Saudi Electricity Company’s (SEC) latest independent power project (IPP), the PP11 facility in Riyadh, has been signed and is set to close on 22 June.

The $2.1bn project is owned by SEC (50 per cent) along with Japan’s Sojitz Corporation (15 per cent), France’s GDF Suez (20 per cent) and the local Al-Jomaih Group (15 per cent).

Finance agreements for the 1,730MW project were signed on 15 June. Around 70 per cent of the project costs are to be covered in debt with the remaining 30 per cent provided in equity. The debt service cover ratio (DSCR) for the project is 1.2.

The project will benefit from a $375m loan from US export credit agency US Exim, which has a tenor of 19 years.

A $530 million international debt tranche was supplied by the following banks:

  • Credit Agricole CIB (France) = $94m
  • Standard Chartered (UK) = $94m
  • Export Development Canada (Canada) = $70m
  • KfW Bankengruppe (Germany) = $56m
  • Societe Generale (France) = $75m
  • Samba (local) = $47m
  • CIC (France) = $47m
  • Intesa (Italy) = $47m

Tenor on the debt stands at 20 years door-to-door including a three-year construction period. Pricing is as follows:

  • 250 basis points during construction
  • 260 basis points to construction plus 4 years
  • 280 basis points to completion plus 8 years
  • 350 basis points to completion plus 13 years
  • 340 basis from completion plus 14 years onwards

There are two Riyal-denominated tranches, both with a 20-year tenor. The first tranche, istisna ijara, is worth $352.8m plus a $29.8m standby facility. Samba put forward $118.6m while the local Banque Saudi Fransi supplied $264m.

The other Riyal tranche, wakala ijara, is worth $263m and is supplied by Alinma ($169m) and National Commercial Bank ($94m).

The sponsors will each take equity bridge loans from the following banks:

  • GDF Suez - KfW
  • Sojitz - SMBC
  • SEC - National Commercial Bank (NCB)
  • Al-Jomaih Group - National Commercial Bank (NCB)

The sponsors were advised by US firm Milbank while the lenders are advised by US-based White & Case.

The US’ Citibank advised SEC in the transaction while Muhannad al-Rasheed in association with Baker Botts provided legal advisory services and Germany’s Fichtner is technical consultant.

The first drawdown on the debt is expected to take place in 4-5 months. The project will use equity to progress construction in the meantime.

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