After a 3 year delay, US$1.56 bln financing package launched for Jurong Aromatics' new petrochemicals project

After a three-year delay caused by the credit squeeze during the global financial crisis, a US$1.56 bln financing package for Jurong Aromatics' new petrochemicals project in Singapore was finally launched with strong support from Korea. The coordinating banks for the project are ING and Royal Bank of Scotland. The borrower is being advised by ING. The US$2.4 bln project involves development of a condensate splitter and aromatics facility on Jurong Island, with production capacity of 1.5 mln tpa aromatics and 2.5 mln tons of fuel. Construction is scheduled to start in early 2011 and the plant is expected to come on stream in 2014. The major investors of the project are Korea’s SK Group, with a 30% stake, Chinese polyester maker Jiangsu Sanfangxiang Group, which holds 25%, Glencore International with a 10% share in the project, Arovin and Shefford Investments (equity investment houses based in India) with about 10% stake each, 5% stake held by the Economic Development Board of Singapore and the balance 10% is held by other minority shareholders based across the region. There are six senior debt facilities within the package, five of which shall be marketed and arranged by ING and RBS, but syndicated to other banks. The sixth facility is a US$340 mln 15.5-year direct loan provided by the Export-Import Bank of Korea (Kexim). The five facilities that the joint coordinators shall be marketing are: a $620 million covered loan provided by Korea Trade Insurance Corporation (100% comprehensive cover up to 15.5 years); a US$280 mln loan guaranteed by Kexim (100% cover up to 15.5 years); a US$155 mln uncovered commercial 10-year loan; a US$50 mln uncovered loan up to 15.5 years; and a US$115 mln working capital five-year facility. The financing is conservatively structured with all the equity having to be contributed upfront before the senior debt is drawn and a 60:40 debt-to-equity ratio in the sponsors’ base case. The lenders will further benefit from a 12-month debt service reserve account and a cash sweep mechanism on the 15.5-year loans that can reduce the tenor to 13.5 years, or possibly shorter, with prepayments being preferentially applied to the facilities with the longest tenors. The Jurong Aromatics project was set up as a special purpose vehicle by Jurong Energy Corporation in 2007.
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