Shuweihat reaches financial close

07 December 2001

The loan financing agreements were signed on 1 December for phase 1 of the estimated $1,600 million Shuweihat independent water and power project (IWPP) in Abu Dhabi. The debt financing is made up of a $1,285 million loan facility, which comprises a $250 million Islamic tranche and a $1,035 million conventional loan. In addition, banks are to provide an equity bridging loan of $350 million to the borrower, the recently formed Shuweihat CMS International Power Company (SCIPC). The project involves the construction on a build-own-operate (BOO) basis of a 1,500-MW, 100 million-gallon-a-day co-generation plant, 250 kilometres to the west of Abu Dhabi City (MEED 30:11:01; 9:11:01).

A seven-strong group was originally mandated to lead arrange the $1,035 million loan. It is made up of Barclays Capital, Citibank, Bank of Tokyo-Mitsubishi, Kreditanstalt fuer Wiederaufbau, Royal Bank of Scotland, National Bank of Abu Dhabiand Abu Dhabi Investment Company.

A further three institutions - Credit Lyonnais, HSBC Investment Bankand Sumitomo Mitsui Banking Corporation - have joinedat a senior arranger level.

Other institutions to have entered the transaction at the sub-underwriting level include Abbey National, Arab Banking Corporation, Bankgesellschaft Berlin, Bayerische Landesbank, Credit Agricole Indosuez, First Gulf Bank, Gulf International Bank, KBC Finance (Ireland)and Union National Bank.

The loan has a step-up pricing mechanism, which starts at 110 basis points (bp) over Libor for the pre-completion phase, before rising to 115 bp up to year seven, to 125 bp from years eight to 10, and rising in steps thereafter to 175 bp from year 16 to maturity. The pricing on the post-completion phases is some 15 bp above the terms outlined in the original term sheet, reflecting the anxieties stemming from the 11 September attacks on the US.

The Islamic tranche has been lead arranged by Abu Dhabi Islamic Bank, which has underwritten $100 million. Dubai Islamic Bankhas also underwritten $100 million, and Kuwait Finance Housethe remaining $50 million.

SCIPC has three shareholders: Abu Dhabi Water & Electricity Authority (ADWEA) with 60 per cent; the US' CMS Energywith 20 per cent; and the UK's International Powerwith 20 per cent.

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