Dow Chemical (DOW) Co. and Saudi Arabian Oil Co. may raise at least 7.5 billion riyals ($2 billion) from Islamic bonds as they seek $12.4 billion in financing for Sadara Chemical Co., two bankers familiar with the deal said.
Dow Chemical and the Saudi company, also known as Saudi Aramco, may also sell a dollar-denominated tranche, one of the bankers said, declining to be identified because the information is private. The Islamic bonds, which comply with Islam’s ban on interest, may be issued before the end of the year, the bankers said.
Saudi Aramco and Dow Chemical hired the investment arms of Deutsche Bank AG, Riyad Bank, Alinma Bank (ALINMA) and Bank Al Bilad to manage the sale, the bankers said. Reuters reported the banks mandated for sale yesterday.
The companies had planned to raise $1.4 billion from the sale of Islamic bonds, two people familiar with the transaction said in May, as well as $2.66 billion in bank loans, $6.5 billion from export credit agency financing, $1.3 billion from Saudi’s Public Investment Fund, and $530 million from the Saudi Industrial Development Fund.
Deutsche Bank spokesman Michael Lermer said the bank doesn’t comment on market speculation. Riyad Bank (RIBL), Alinma Bank and Bank Al Bilad’s public relations departments didn’t answer calls from Bloomberg. Saudi Aramco declined to comment. Rebecca Bentley, a spokeswoman for Midland, Michigan-based Dow, couldn’t immediately comment when contacted on May 30 about the $12.4 billion financing.
Sadara, Saudi Aramco and Dow Chemical’s $20 billion joint venture, may begin production in 2015, with 40 percent of the output being exported to Asia and as much as 35 percent to the Middle East and Africa, Dow Chemical Chief Executive Officer Andrew Liveris said May 3.
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