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KEY ASSETS ACQUISITION

Emirates Steel gets $1.3bn funding for expansion

Abu Dhabi, June 9, 2014

Abu Dhabi based Emirates Steel, a Senaat company, said it has secured new credit facilities worth $1.3 billion from a consortium of 19 leading local and international banks without government guarantees.

The transaction reflects Emirates Steel’s coming of age and echoes the trust local and international banks have for the quality steelmaker, said a senior official.

"The facilities will be used to refinance $1.1 billion worth of existing financing that was put in place in 2010 through nine banking institutions to finance our expansion projects," stated Hussain J Al Nowais, the chairman of Emirates Steel and Senaat.

Moreover, Emirates Steel is pumping in nearly $263 million for acquiring quality steel assets, he added.

Billing the transaction as a real success, Al Nowais said: "As an established corporate, we have been able to significantly reduce our borrowing costs and drive the pricing down. We have also extended the loan tenor to eight years, which allows us more flexibility in managing our financial resources."

"This reflects Emirates Steel’s coming of age and echoes the trust local and international banking institutions have in us," he added.

Al Nowais welcomed the level of interest that multi-national financial institutions had shown in the deal calling it “a true endorsement by the international financial markets of what we have achieved at Emirates Steel.”

He further added that the transaction was concluded with no Government guarantees and with more favourable terms than the 2010 facilities.

According to him, the deal, which was brokered by France’s BNP Paribas, was four times oversubscribed.

Al Nowais pointed out that Emirates Steel was pushing ahead with its strategic ambitions to realize its expansion goals of producing integrated steel solutions utilizing its highly skilled UAE national employees and producing steel to international standards.

The objective, he said, was to supply the global markets with “UAE Made” quality steel products.

"The 2010 financing was put in place to finance the first and second phase of expansion projects, which pushed up plant capacities in 2012 to 3.5 million tons per year. These projects are now complete and generating solid cash flows," he revealed.

Al Nowais, who chairs one of the most powerful industrial holding corporations in the UAE, said the key funding deal will allow the firm to consolidate Senaat’s steelmaking assets under Emirates Steel, which was set up in 1998 at a cost of $3 billion to provide integrated solutions in steelmaking and to support local downstream industries in line with Economic Vision 2030.

Commenting on the transaction, Emirates Steel’s CEO Saeed G Al Romaithi said the financing will also support further expansion of its product range.

“We are now working on bringing to market several technically-challenging new products to meet the growing demands of our customers and to expand our customer base,” he stated.

Plans by Emirates Steel are now underway to add value-added products to the range to reduce its exposure in the highly-competitive commodities markets, he noted.

“The new range of value added products includes branded nuclear quality steel, medium and high carbon wire rod and offshore grade heavy sections and sheet piles,” he said.

In total, the Company boasts three bar mills, a wire rod mill and a structural steel mill with a combined capacity of 3.5 million tons a year.

Giving details about the eight-year facility, Emirates Steel’s CFO Stephen J Pope said it consists of a $242.5 million Islamic term facility with UAE-based Abu Dhabi Islamic Bank (ADIB), Al Hilal Bank and Dubai Islamic Bank (DIB) together with a $1,05 billion conventional term facility funded by Abu Dhabi Commercial Bank (ADCB), Al Khaliji, Arab Bank, Arab Banking Corporation (ABC), Bank of Tokyo Mitsubishi, BNP Paribas, Citi, Credit Agricole CIB, First Gulf Bank (FGB), National Bank of Abu Dhabi (NBAD), Natixis, Royal Bank of Scotland (RBS), Societe Generale, Unicredit and Union National Bank (UNB).

Dentons acted as legal counsel to Emirates Steel and White & Case LLP acted as legal counsel to the lenders.

Accordding to Pope, the facility attracted strong interest from the international financial markets.

"The offers received reflected a four times oversubscription on very favourable terms. The fast track development of Emirates Steel meant that we have been able to refinance our project finance based loans with a corporate debt structure; realizing considerable savings to the company together with an extended tenor to reduce liquidity risk," he added.-TradeArabia News Service




Tags: BNP Paribas | Expansion | Credit | Emirates Steel |

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