RIYADH, 15 September 2006 — The Arab National Bank (ANB) executed an Islamic financing agreement last Monday (Sept. 11) to fund the construction of Northern Region Cement Factory (Northwest of Arar), according to Dr. Robert Eid, ANB managing director.
The agreement, amounting to SR500 million, is considered the largest Shariah-compliant financing ever executed in the Saudi cement sector. Eid and.
Sulaiman Al-Harbi, chairman of the board of Northern Region Cement Company, signed the agreement in the presence of Saud Al-Arife, NRCC managing director, Abdul Aziz Al-Helaissi, ANB deputy head of the Corporate Banking Group, and other executives from both sides.
Speaking on the occasion, Eid said the agreement is an important element of the expansion initiatives in the cement sector across the Kingdom. ANB approved the financing of the project after assessing its long-term viability as well as its economic benefits to the region.
This transaction made use of ANB’s enhanced capability to formulate and execute Compliant-compliant financing solutions to meet the needs of the bank’s corporate clients. Reid said ANB is delighted to support NRCC as it embarks on this very important project, which will contribute to the development of the region. The agreement comes not only in line with the bank’s continued efforts to support the current and future needs of r customers, but also demonstrates its strong commitment to meet the demands from the domestic market, thereby contributing to the growth of this vital sector of the Saudi economy.
Commenting on the agreement, Harbi stated, “the project will be the largest private sector industrial investment in the Northern Region to date. At a cost of SR1.2 billion, it will have an estimated production capacity of 6,000 tons per day, and produce various types of cement. This venture will fulfill the demand for cement products in the Northern Region according to the economic feasibility study. Our plan for the company is to ‘go public’ subsequent to factory commissioning. As a leading domestic bank, ANB will be given the opportunity to lead the IPO.”
The factory has a residual construction tenor of 17 months. The cornerstone was laid down six months ago under the auspices of the Northern Region governor. Construction has begun at the site. The development and construction contractor is Nesma & Partners Contracting Company. “The project has several advantages such as the availability of high quality feedstock in large quantities with a strategic reserve sufficient for more than 250 years; increased budgetary allocations for public and private development projects in the Northern Region and the close proximity of the factory to neighboring countries all of which represent promising future export markets,” Harbi said.
