Financial advisers on the Ras Tanura chemicals and plastics complex in Saudi Arabia (the world's largest project financing deal) are expected to be appointed soon, upon drawing up of shortlists for international and local banks. The project will require a total of US$25 bln to develop. Upon selection, the advisers will be asked to raise US$10 bln in financing for the project. The appointments are expected to be made in April by the project's sponsors, Saudi Aramco and Dow Chemical Company, after banks have submitted proposals for the fundraising.
The international banks that have been shortlisted are BNP Paribas, Calyon, Citigroup, HSBC, Royal Bank of Scotland and Societe Generale. A separate shortlist of regional banks, with which the international firms will have to partner, has also been agreed. Several groups are being formed, with HSBC understood to be working with Sabb, Calyon with Saudi Fransi, and Citigroup with Samba. Several other banks, including Apicorp, Saudi Hollandi, Gulf International Bank and Riyad Bank, have also been shortlisted as potential local partners.
Because of the size of the funding requirements, it is anticipated that banks will draw on as many funding sources as possible, including export credit agencies, commercial banks, the bond market, Islamic finance and private equity investors. The advisers are to be given a large degree of freedom in designing a financing package. The successful banks will have 12-18 months to develop the funding plan for the huge refinery and petrochemicals complex. A request for proposals was sent to banks by Dow and Aramco in the first week of February. The project will be financed on a 70:30 debt/equity basis.
The Saudi government will contribute to the project through the Public Investment Fund and the Saudi Industrial Development Fund. A flotation of at least 30% of the project company is also anticipated.
The Ras Tanura complex, in Saudi Arabia's Eastern Province, will produce more than 300 different plastics and chemical products. It will have a 1.2 mln tpa ethane/naphtha steam cracker as its central element, and will be integrated with the existing Ras Tanura refinery complex.