United Arab Shipping takes on $2bn debt for acquisitions

04 July 2008
Gulf International Bank is working on arranging up to $2bn worth of debt for United Arab Shipping Company (UASC) to fund the acquisition of new ships and the continued expansion of the business.

The debt will be split between a $500m corporate facility that is expected to be completed by mid-July and a $1.5bn ship acquisition facility that should be completed later in the year.

The $500m loan for the Kuwait-based company will have a tenor of five years, and is expected to be priced at 200 basis points over the London interbank offered rate (Libor), with fees of between 100 and 125 basis points.

Six regional institutions are expected to form the banking group for the facility, including banks from Bahrain, the UAE and Saudi Arabia. The deal has been increased in size from the $400m initially sought by the firm.

It is understood that the acquisition facility, which will have a longer tenor, may be financed in several smaller stages over the next few months and will use both regional and international banks. Bankers close to the deal say that a banking group has yet to be appointed for this part of the financing.

UASC, which was established in 1976 by six Gulf countries - Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE - announced at the end of June a $1.5bn order for nine container ships from South Korea’s Samsung Heavy Industries. The order is the largest of its kind ever made by a Gulf company.

The ships are expected to be delivered between October 2010 and the end of December 2011.

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