Banque Fransi in $720mn steel financing deal
by This email address is being protected from spam bots, you need Javascript enabled to view it on Saturday, 02 May 2009
Mohamed Abdulaziz Al-Rajhi & Sons Industry Holding is to sign an agreement on Monday with Banque Saudi Fransi for a 2.7 billion riyal ($720 million) financing for the expansion of its Saudi steel operations.
The privately-owned holding said in a statement the agreement appointed the French Calyon's affiliate as financial adviser and arranger for the financing.
The size of the loan may change ''depending on the requirements of the credit market'', the firm said. A spokesman for the holding said: "The financing is currently being arranged by Fransi". He could not say when it would be finalised.
The owners of Mohamed Abddulaziz's holding are related to the main owners of Al-Rajhi Bank. The holding needs the cash to help finance the expansion of its Rajhi Steel Industries' subsidiary.
"The company will immediately start building the new reinforced steel plant in Jeddah with a production capacity of 1 million tonnes per year," the holding said in the statement.
The expansion will cost a total of 4 billion riyals and will more than double its production capacity by as early as 2012.
Rajhi Steel's Chief Executive Mehdi bin Nasser al-Qahtani told Reuters in August that his firm was expecting an equity injection from the holding's owners and loans from state-run Saudi Industrial Development Fund and other banks.
Many projects in the kingdom have been delayed because of scarce financing as the global financial crisis forced local banks to opt for greater caution on lending until visibility improves.
On Wednesday, property developer Jabal Omar Development Co said its appointed financial adviser Jadwa Investment failed to arrange a $3.3 billion financing within the agreed deadlines for a property project near the holy shrines at Mecca. (Reuters)
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