Sadara Basic Services Company today issued a SAR 7.5 Billion (equivalent to US$2 billion) project sukuk to help finance the construction of Sadara Chemical Company’s (Sadara) US$19.1 billion chemical and plastic production complex in Jubail Industrial City II, Saudi Arabia. Sadara, a joint venture between The Dow Chemical Co. and Saudi Arabian Oil Co., received approval for the sukuk issuance from the Capital Market Authority of Saudi Arabia last month and launched the issuance on March 13th. The sukuk certificates have a 15.75-year term with the investors expected to receive return of 6 month SAIBOR plus a margin. The sale was limited to Saudi nationals or established companies holding a commercial registration number with the Ministry of Commerce and Industry of Saudi Arabia.
A Milbank team (as international counsel) represented Deutsche Securities Saudi Arabia LLC, AlBilad Investment Co., Alinma Investment Co. and Riyad Capital as joint lead managers and joint book runners for the issuance. The Milbank deal team was led by London-based partner John Dewar, chair of the firm’s Islamic Finance Practice. Other members of Milbank’s sukuk team included associates Munib Hussain, Vicky Cox, Felicia Hanson, Chris Taufatofua, Merisa Fershing and Geoffrey Dunnett.
“We are honoured to have represented the joint lead managers in this milestone transaction for Sadara, The Kingdom and for Islamic Finance,” Mr. Dewar said. The issuance is the largest project finance sukuk ever issued and marks the first phase of Sadara’s senior debt raising, which will include export credit facilities involving multiple export credit agencies, as well as commercial and Islamic bank facilities,” he added.
Located in the Eastern Province of Saudi Arabia, the chemical complex is projected to be the world’s largest integrated chemical compound ever built in a single phase. First production units are expected to come on line in the second half of 2015, with all production units coming on line in 2016.
