Emirates Steel seals $1.1 bln financing deal

Emirates Steel seals $1.1 bln financing deal

Loan part of a seven-year project financing deal.

August 25, 2010 9:09 by Reuters

Abu Dhabi Emirates Steel Industries (ESI) has signed a $1.1-billion, seven-year project financing deal with nine banks, the government-owned firm said on Wednesday as it pushes ahead with capacity expansion.

Emirates Steel is a subsidiary of government-owned Abu Dhabi Basic Industries Corporation (ADBIC).

The project finance was raised through a $733-million facility from seven conventional banks and a $367-million loan from two Islamic banks, the company said in a statement.

“Emirates Steel has come of age and is now on its own, leaving its parent and this financing reflects the confidence of bankers despite tough financial markets,” Stephen Pope, chief financial officer told Reuters.

National Bank of Abu Dhabi , Union National Bank, First Gulf Bank , Bank of Baroda, Arab Banking Corporation, Al Khaliji France and Al Khaliji Commercial Bank underwrote the conventional facility.

Abu Dhabi Islamic Bank and Al Hilal Bank arranged the Islamic facility.

France’s Natixis acted as financial advisor and Denton Wilde Sapte as legal counsel on the transaction.

Emirates Steel has annual output capacity of 2 million metric tons now, with capacity expected to reach 3 million metric tons in 2011 through a $2.45 billion expansion plan.

“Phase one is in operation, and commissioning of the phase two plant to manufacture steel will start at the end of this year with production in early 2011,” said Pope. (Reporting by Stanley Carvalho; Editing by Clarence Fernandez)