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Sun 24 Jan 2010 03:00 PM

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Emirates Steel to approach banks to refinance $1.5bn

Abu Dhabi firm's objective is to consolidate assets and funding, CFO says.

Emirates Steel to approach banks to refinance $1.5bn
STEEL FIRM: Emirates Steel Industries (ESI) will approach banks in March to refinance $1.5 billion used for the first and second phase of its plant expansion. (Getty Images)

Abu Dhabi's Emirates Steel Industries (ESI) will approach banks in March to refinance $1.5 billion used for the first and second phase of its plant expansion, the company's chief financial officer said on Sunday.

Last year the company had announced the completion of its first phase expansion plan which lifted output from 65,000 tonnes per year to 2 million tonnes.

"The cost of the first expansion phase was $700 million and was done through a bridging loan which Emirates Steel took," Stephen Pope told Reuters in a phone interview.

A further $500 million of funds was given for phase two of the expansion from General Holding Corp, ESI's holding company, Pope added.

"So the objective is to consolidate assets and funding and we will be going out to the market for refinancing of $1.5 billion which we are hoping to be complete by the second quarter this year."

Pope declined to give further details.

The company will approach local, regional and international banks for the refinancing, he said.

Emirates Steel's output capacity is expected to reach 3 million tonnes a year by 2011.

The company has said it is looking to further boost its annual capacity to 6.5 million tonnes by 2013-2014 through expansion and acquisitions.

Last year Oman's Shadeed Iron and Steel said ESI was in talks to acquire the company. (Reuters)

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