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Abu Dhabi power project said close to $1.1bn loan

Sponsors of the Shuweihat 2 power generation and water desalination project in Abu Dhabi have lined up 12 banks to provide a $1.1 billion, 22-year bank loan to back the scheme, bankers close to the deal said.

The lenders in the closing stages of agreeing the $1.1 billion loan are Bank of Tokyo-Mitsubishi UFJ, BayernLB, BNP Paribas, HSBC, KfW, Mizuho, National Bank of Abu Dhabi, Samba, Standard Chartered Bank, Societe Generale, SMBC and Sumitomo Trust, a senior banker said. The banks are committing about $100 million each, the source said.

The loan covers half the debt - Japan Bank for International Cooperation (JBIC) is also providing $1.1 billion, 22-year financing for the project.
French utility GDF Suez and Japan's Marubeni Corp each have a 20 percent stake in the $2.6 billion project, and Abu Dhabi Water and Electricity Authority (ADWEA) holds the remaining 60 percent.

As previously reported by Reuters Loan Pricing Corp, the starting margin is 260 basis points (bps) over LIBOR, having been increased from 225 bps, while upfront fees are 325 bps, up from 300 bps.

The upfront fees could be increased further, following pressure from one or two of the banks, the senior banker said.

The financing will replace a $900 million bridge loan that was agreed to at the end of 2008 and matures at the end of September.

The deal is in the final stages of being completed despite the relatively low pricing and the long maturity - the 22 year tenure would be the longest for any Gulf project financing this year.

Calyon and Natixis were both on the original bridge loan but dropped out of the new loan over pricing and maturity issues, the senior banker said.

However, the strong sponsors and the presence of the Japan Bank for International Cooperation (JBIC) saw the deal home, the bankers said. With JBIC on board, four of the 12 banks in the syndicate are Japanese.

"Pricing is a bit thin but the deal has strong fundamentals with GDF Suez, Marubeni and JBIC in there," the senior banker said.

GDF Suez sold a 20 percent stake to Marubeni as a Japanese partner is required in order for JBIC to be involved and provide part of financing.

HSBC is acting as financial adviser to the project.

Sponsors GDF Suez and ADWEA had to take a nine-month, $900 million bridge loan last year because of market turmoil after ditching plans for a $2.6 billion, 23.5-year financing package that had originally been lined up to back the project.

Shuweihat 2 is due to be completed in 2011 and will comprises a 1,500 megawatt natural gas-fired power station and a 454,610 cubic metres a day desalination plant.  (Reuters)

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