Sabic $6bn borrowing plan on track
Manama, September 2, 2007
Saudi Basic Industries Corp (Sabic) said on Sunday it was on track to borrow $6 billion this year for an industrial complex despite credit market turmoil that forced it to cut a planned bond in half last month.
Sabic, the world's largest chemical maker by market value, aims to raise mainly Islamic loans for the $10 billion complex it is building with affiliate Kayan Petrochemical Company, chief financial officer Mutlaq al-Morished told Reuters.
Banks have already underwritten the loans and will start syndication in the next few months, Morished, who is also Kayan's chief executive, said.
Sabic was not likely to sell any bonds that comply with Islam's ban on interest to raise the money, he said.
"Raising $6 billion was the plan from day one. We haven't changed anything. The deal is already underwritten ... but it has to be syndicated at the end of the third or fourth quarter," Morished said.
Last month Sabic cut a bond sale by almost half to $1.5 billion on concerns that global credit market fears sparked by the US subprime mortgage problems had blunted investor appetites.
The bond sale was part of plans to raise about $8 billion to fund Sabic's purchase of the plastics unit of General Electric & Co. Sabic raised the rest of the cash in bank loans.
"Even in this market we managed to finance an acquisition of $8.2 billion when everybody else failed. If we can do that why can't we finance Saudi Kayan which is only $6 billion?," Morished said.
One of the bankers arranging the loans said the type of high-yield investors who shied away from Sabic's bond last month would not be those targeted for Kayan debt.
"Kayan is project financing, which means funding is pretty much through banks ... these are more stable, relationship driven, and understand the company and its capabilities," the banker, who asked not to be identified, said.
HSBC, BNP Paribas, ABN Amro, Bahrain's Arab Banking Corporation and Saudi' Arabia's Samba Financial Group are arranging the Kayan debt, the banker said. - Reuters