Banks withdraw pre-condition

By Mehmood Rafique

A consortium of banks has agreed to waive off “quota agreement amendment” condition paving the way for smooth release of the $1.5 billion financing for Aluminum Bahrain’s Line 5 expansion project.
A senior banker, representing a lead arranger in the consortium, told the Tribune that all participating banks and financial institutions have agreed to withdraw this pre-condition.
“We have intense negotiations and the banks also sought internal and external legal opinions on the quota agreement amendment,” the banker who didn’t want to be quoted by name said, adding that legal experts suggested that there was no need for Alba to fulfill the said condition.
“Now Alba can utilise the entire financial package according to their requirements,” he said.
The Chief Executive of Alba, Bruce Hall, told the Tribune that Alba sought project financing facility on clear terms and conditions.
“Alba has a strong asset base and sufficient equity to provide any sort of guarantees, if there are any,” he said. “Out of the total package of $1.7 billion, 10 per cent or $1.7 million is to be raised from the shareholders’ equity. The company has an excellent cash flow situation and under such circumstances there was no need to provide any extra guarantees or meet any pre-conditions in this regard,” Hall said. “Alba needs to ask anyone entity to provide a sovereign guarantee against its financial package.”
The expansion plan, due for completion in June 2005, will increase Alba’s annual production by 307,000 tonnes per annum, making it the largest smelter in the world outside eastern Europe.
At a total cost of $1.7 billion, the expansion project will include a new 640MW power plant, a carbon plant, new casting facilities and will upgrade existing facilities.
The multi-sourced financing for the Line 5 expansion is being implemented in two stages-a commercial tranche of $500 million, an Islamic finance tranche of $250 million and a metals facility tranche of $300 million floating rate bond issue in the local market and $200 million export credit-linked tranche.
A $500 million, 10-year commercial tranche is to be supplied by Gulf International Bank, HSBC, Mizuho Financial Group, National Bank of Bahrain, Saudi British Bank, Sumitomo Mitsui Banking Corporation, Bank of Tokyo Mitsubishi, Bank of Bahrain and Kuwait, Qatar National Bank and National Bank of Abu Dhabi.
A second tranche of $250 million will be supplied by the Islamic banking sector from Arab Banking Corporation Islamic Bank, Dubai Islamic Bank, HSBC Amanah Finance, Riyad Bank, Islamic International Arab Bank, BBK, GIB and Abu Dhabi Islamic Bank while a tranche of $300 million is being jointly arranged by Goldman Sachs and Gulf International Bank.
Last update on: 6-1-2004