KUWAIT CITY, 25 November 2004 — Kuwait’s Equate Petrochemicals Company has secured a $600-million syndicated loan to build a second olefins plant in the country, the National Bank of Kuwait (NBK) announced yesterday.
NBK and Islamic bank Kuwait Finance House (KFH) organized more than 20 local and international banks to participate in the lending project, NBK said in a statement. NBK said it organized 11 banks to participate in the “commercial” side of the loan for $300 million.
KFH with nine other banks and investment companies offered Equate the remaining $300 million through an Islamic trade and leasing agreement called “morabaha.” Equate will use the money to re-finance itself, and engage in its expansion of an olefins project, NBK noted.
Equate, which is a joint-venture partnership between Dow Chemicals Corporation and Kuwait’s Petrochemical Industries Company, has plans to build a second olefins plant in Kuwait for an estimated $2 billion.
The new plant, Equate II, is expected to double current annual output from its first plant of 800,000 metric tons of ethylene, 600,000 metric tons of polyethylene, and 400,000 metric tons of ethylene glycol.
Equate is likely to go back to financial markets to secure the remainder of the money needed to build the plant which is due to open in 2007, said NBK. Equate Petrochemicals posted record net profits of $276 million in 2003.
The other banks are Arab Banking Corporation, Citibank, Gulf International Bank, HSBC and BNP Paribas, in addition to Arab Bank, Deutsche Bank and Standard Chartered and others, said Sheikha Al-Bahar, NBK Group general manager for corporate banking.