SABIC unit gets $855mn expansion loan

Saudi Basic Industries Corp. (SABIC), the world's largest chemicals company by market value, said on Tuesday a subsidiary had borrowed $855 million in an Islamic loan to finance expansion.

Saudi European Petrochemical Co., also known as Ibn Zohr, borrowed the money under a murabaha facility from a consortium of Saudi and international banks, SABIC said in a statement, without naming the lenders.

In murabaha deals, a financer buys a commodity and sells it to the customer at a higher price, complying with Islam's ban on interest on lending.

SABIC owns 80 % of Saudi European, which is expanding an existing polypropylene plant in the Gulf coast city of Al-Jubail to add 500,000 tonnes of capacity by January 2009, a SABIC official said. The plant's current production capacity is 640,000 tonnes per year.

Saudi-based Arab Petroleum Investments Corp. and Milan-based Ecofuel each own 10 % of Saudi European.

SABIC affiliate National Industrial Gases Co. in April borrowed $400 million to fund an expansion project.

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