Syndication completed on Sabic acquisition finance

10 January 2003
General syndication of the Eur 2,353 million ($2,451 million) debt package Saudi Basic Industries Corporation (Sabic)used to finance its acquisition of Netherlands-based DSM Petrochemicals (DPC)has been completed. A total of nine banks have joined the transaction.

National Bank of Bahrain, National Bank of Dubai, Bank of Tokyo-Mitsubishiand First Gulf Bankparticipated in the Eur 408 million ($425 million) tranche used to provide the base equity for the acquisition vehicle. The top ticket offered in this tranche, for Eur 50 million ($52 million), carried fees of 55 basis points (bp).

Four more institutions participated in the guaranteed facility. They are Emirates Bank International, National Bank of Kuwait, Abu Dhabi Investment Companyand British Arab Commercial Bank. The top ticket offered in this tranche, also worth Eur 50 million ($52 million), carried fees of 75 bp.

Only one bank, Malaysia's Bank Bumiputra, joined the DPC tranche in which Eur 50 million ($52 million) tickets were being offered with 90 bp of fees.

It is understood that most of the lead arrangers have reached, or are at least close to, their final hold targets, though those that entered with their Saudi affiliates may be more comfortable than those without.

The lead arrangers were JP MorganChase & Company, HSBC with its local affiliate The Saudi British Bank, Credit Agricole Indosuezwith its local affiliate Al-Bank Al-Saudi Al-Fransi, Saudi American Bank, Arab Bankwith its Saudi affiliate Arab National Bank, Arab Petroleum Investments Corporation (Apicorp), Arab Banking Corporationand Gulf International Bank (MEED 1:11:02).

The sub-underwriters are Riyad Bank, Saudi Hollandi Bank, National Bank of Abu Dhabi and ING Bank, with Bank al-Jaziracommitting to a take-and-hold position during the sub-underwriting process.

Bankers involved in the transaction ascribe the length of time taken to close the transaction - syndication was launched in October and the lead arranging group was mandated in the summer - to changes in management at Sabic and the complexity of the deal.

Bankers also say that the transaction might have been syndicated more rapidly, and to a broader international base, if the pricing on the deal had been a little more generous. JP Morgan is the financial adviser on the transaction.

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