The Abu Dhabi-based firm, the operator of the largest steel plant in the UAE reached a seven-year project financing agreement with a consortium of seven conventional banks and two Islamic finance institutions.

The conventional banks in the consortium are the National Bank of Abu Dhabi, Union National Bank, First Gulf Bank, Bank of Baroda, Arab Banking Corporation, Al-Khaliji France and Al-Khalij Commercial Bank. The two Islamic finance institutions are the Abu Dhabi Islamic Bank and Al-Hilal Bank.

France's Natixis acted as financial adviser and Denton Wilde Sapte as legal counsel for the transaction.

The seven-year loan was raised through a $367 million Islamic facility and a $733 million conventional facility. However, the pricing of the loan, which is part of $2.2 billion in financing the steelmaker said it obtained on Aug. 1, remained unclear.

Emirates Steel is a subsidiary of the Abu Dhabi Basic Industries Corporation (ADBIC), which is wholly-owned by General Holding Corporation (GHC), an Abu Dhabi government-owned company.

The company will receive an additional $500 million in capital from its parent firm General Holding and generate $600 million more from its own resources, spokesman Majed Taifour was quoted by Bloomberg as saying.

The funds, that will be used to finance the company's expansion plans, replace a $500 million bridging loan the company has relied on for the past year that matures next week.

Earlier this month, there were reports that the company will receive $1.7 billion from banks and Islamic institutions and $500 million from an Italian export credit agency in partnership with its parent firm in one of the largest fund-raising deals of the year.

Musaffah-headquartered Emirates Steel is in the middle of a $2.3 billion expansion program that will raise the amount and variety of products the firm makes and vertically integrate its operations to control nearly every stage of the steel-making process from iron oxide pellets to delivery of re-bar to construction sites.

In July, the company announced that the expansion projects and improvement in UAE steel market conditions had allowed it to hike output by 45 per cent in the second quarter over same period in 2009.

While eighty per cent of the company's output is sold on the domestic market, the rest is exported to neighboring GCC states, Jordan, the Indian sub-continent and East Asia.

Since last year, the firm has weighed a third-stage output increase, either through acquiring a rival company or constructing a new integrated steel plant at Taweelah near Dubai border.

The steelmaker, eyeing to boost output to three million tons a year by 2011 and double it to six million tons a year by 2014, reportedly made an offer to acquire Oman-based Shadeed Iron and Steel last year, but has made no reference to the deal in months.