SR 1.4 bn loan deal for Jubail petchem project

Saudi International Petrochemical Company (Sipchem) announced yesterday that its affiliate, International Polymers Company (IPC), has signed a Shariah compliant SR 1.4 billion ($ 375 million) loan and bridge facilities with four major Saudi banks, Riyad Bank, National Commercial Bank, Saudi Hollandi Bank, and The Saudi British Bank.
The purpose of these facilities is to support the project financing of a Greenfield EVA/LDPE plant.
The plant, which is currently under construction by G.S. Engineering & Construction Corporation of Korea, will produce Ethylene Vinyl Acetate (EVA) and Low Density Poly Ethylene (LDPE) with an annual production capacity of 200 thousand metric tons in its industrial complex in Jubail Industrial City. Plant start-up is scheduled in the second half of 2013.
The financing agreements have been signed by Eng. Abdullah S. Al-Saadoon, president operations, and the executives of the concerned banks.
The total project cost of SR 3 billion are being funded through Islamic loan facilities, shareholders equity and facilities from both SIDF & PIF.
The bank debt amount will be scaled down by up to 50% once the PIF facility is signed in the future.
EVA is used as a feedstock in the production of heat soluble adhesives, resin products and high-quality sports bandages; while LDPE is used as a feedstock in the production of various types of containers, bottles and medical detergents.
IPC is jointly owned by Sipchem (75%) and Hanwha Chemical Corporation (25%). HSBC Saudi Arabia Limited acted as the financial adviser and Norton Rose as the legal counsel for the project and its sponsors.