Debt issue of $2.2bn to finance UAE utility plant
Abu Dhabi, August 6, 2007
Calyon, Citibank and Sumitomo Mitsui are arranging a 20-year, $2.24 billion debt issue to finance the Fujairah 2 water and power project in the UAE.
"The arrangers for the debt, which is 80 percent of the project cost, are Calyon, Citibank and Sumitomo Mitsui Banking Corporation (SMBC). We also expect the Japan Bank for International Cooperation (JBIC) to support the project," said Ranald Spiers, regional director of International Power, the developer.
"We will fund the project using 20 percent equity and 80 percent debt. Our (International Power's) equity is about $112 million which is 20 percent of total equity," he told Reuters in an e-mailed statement.
"The loan will be for at least 20 years. The margins will depend on the final financing, but will be under 100 basis points over LIBOR," said Spiers, adding that financial close is expected be end-December this year.
Last Thursday, Abu Dhabi awarded the contract to build the $2.8 billion power and water desalination plant to Britain's International Power and Japan's Marubeni Corp.
International Power and Marubeni signed a 20-year deal to operate the plant jointly and supply all the power and water to the Abu Dhabi Water & Electricity Authority.
The Fujairah 2 power plant will produce 2000 megawatts of power and around 130 million gallons per day of water and is expected to start up in 2010.
The debt-equity ratios for most of International Power's projects have always been either 80:20, or even more aggressive, Spiers said.
"The worldwide credit crunch will have little or no impact on the Middle East project finance market since the credit support is superb (Abu Dhabi government risk)," he added. -Reuters