Mohamed Abdulaziz Al-Rajhi & Sons Industry Holding, a privately owned holding, will sign an agreement with Banque Saudi Fransi for a SR2.7 billion ($720 million) financing for the expansion of its steel operations.

The holding company said in a statement the agreement appointed the French Calyon's affiliate, as financial adviser and arranger for the financing.

The size of the loan may change 'depending on the requirements of the credit market', the firm said.

A spokesman for the holding added: 'The financing is currently being arranged by Fransi.” He could not say when it would be finalised.

The owners of Mohamed Abddulaziz's holding are related to the main owners of Al-Rajhi Bank. The holding needs the cash to help finance expanding its Rajhi Steel Industries' subsidiary.

'The company will immediately start building the new reinforced steel plant in Jeddah with a production capacity of 1 million tonne per year,' the holding said in the statement.

The expansion will cost a total of SR4 billion and will more than double its production capacity by as early as 2012.

Rajhi Steel's chief executive Mehdi bin Nasser al-Qahtani said in August that his firm was expecting an equity injection from the holding's owners and loans from state-run Saudi Industrial Development Fund and other banks.

Many projects in the kingdom have been delayed because of scarce financing as the global financial crisis forced local banks to opt for greater caution on lending until visibility improves.

On Wednesday (April 29), property developer Jabal Omar Development said its appointed financial adviser Jadwa Investment failed to arrange a $3.3 billion financing within the agreed deadlines for a property project near the holy shrines at Mecca. – Reuters