A raft of international and local banks are close to joining an expanded mandated lead arranging group on the debt package for the Taweelah B independent water and power project (IWPP) in Abu Dhabi.

The banks backing the winning developer consortium of Japan’s Marubeni Corporation, Malaysia’s Pendekar Power and US-based BTU Venturesare ANZ Investment Bank– the project finance division of which is in the process of being acquired by Standard Chartered BankBNP Paribasand Kreditanstalt fuer Wiederaufbau.

It is understood that eight international banks have been invited to seek credit approval for joining the MLA group. They are Bank of Tokyo-Mitsubishi, Bayerische Landesbank, Calyon, HSBC, KBC Bank, Mizuho Financial Group, Royal Bank of Scotlandand Sumitomo-Mitsui Banking Corporation.

They have been invited to bid for $75 million underwriting tickets, with a hold target of $50 million, and have until 16 December to table their commitments – the day after the scheduled signing of the power and water purchasing agreement (PWPA).

It is expected that the final MLA group will be formed by the end of the year and that financial close will be reached in April 2005.

The 20-year package is split into a $856 million main tranche with a $29 million stand-by facility. Both are expected to have a step-up pricing structure starting at 115 basis points (bp) over Libor pre-completion, dropping to 110 bp post-completion and then rising to 125 bp, 140 bp, 160 bp and 170 bp – very close to the margin on the Umm al-Nar IWPP debt arranged in 2003.

It is understood that the banks joining the original three MLAs have been offered up-front fees of 100 bp.

A further group of regional and local banks have also been invited to join the deal. Among them are National Bank of Abu Dhabiand Abu Dhabi Commercial Bank, bankers close to the deal say. It is understood that some local capacity will be included in the 20-year package but that the bulk of it will be directed towards the 3.5-year equity bridge loan that is also under preparation.

The remaining $1,200 million of the debt financing requirement is expected to be secured from the Japan Bank for International Co-operation (MEED 8:10:04).

Original plans for a significant Islamic finance tranche have been sidelined by the strong demand demonstrated by both international and regional banks for the conventional package, and also by the constrained appetite for 20-year exposure from the Islamic market.

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