16 December, 2018

Emirates Steel finalizes USD 400 million Murabaha facility

New loan facility to support Emirates Steel’s growth and development

16 December 2018, Abu Dhabi, UAE – Emirates Steel, the only integrated steel plant in the UAE and a subsidiary of the General Holding Corporation (SENAAT), has finalized a significant loan refinancing deal that will enable the Company to accelerate deleveraging, increase financial flexibility, simplify its debt structure and fund its growth plans.

The new financing replaces Emirates Steel’s outstanding secured debt with a corporate financing structure reflecting the established nature of the company. The loan facility has a tenure of four years and is structured as an unsecured amortizing term loan.

The successful issuing of US$300 million by Senaat, which recently listed on the Abu Dhabi stock market as the first-of-its-kind dual listing between ADX and the London Stock Exchange, has strengthened the position and ability of Emirates Steel to complete a loan refinance by obtaining preferential refinancing options based on a Sharia compliant financing instrument.

The new loan facility will be used for general corporate purposes, including the refinancing of the company’s existing bank debt. The facility was coordinated by BNP Paribas, with Abu Dhabi Islamic Bank acting as the Islamic Structuring Bank. . The lenders are: AB Svensk Exportkredit; Citibank N.A., First Abu Dhabi Bank PJSC; MUFG Bank Ltd.,Union National Bank PJSC; BNP Paribas; and Abu Dhabi Islamic Bank.

Eng. Saeed Ghumran Al Remeithi, CEO of Emirates Steel, said: “The successful closing of this Murabaha agreement demonstrates Emirates Steel financial strength and stature among local and international financial markets. It is a testament to Emirates Steel's ability to secure its funding requirements on attractive terms. “
“While Emirates Steel is more than capable of meeting its current financial obligations, in the context of its long-term financial strategy, it seeks to capitalize on the current market situation by taking advantage of available financing opportunities in order to obtain low interest rates,” added Al Remeithi.

The new loan facility has been structured as a Sharia compliant financing instrument. While based on a commodity Murabaha structure, the facility seeks to avoid the need for repeat commodity trades on a rolling basis and instead relies on a fixed rate, long-term commodity Murabaha contract, with an alternative mechanism to achieve a floating rate. This innovative Sharia compliant financing is a first for the syndicated loan market in the region.