Citadel Capital Corp., the biggest publicly traded Egyptian private equity firm, said one of its units, the Egyptian Refining Co., obtained a $2.6 billion loan to help finance construction of a $3.7 billion oil refinery.
“That this project remained on track through the deepest financial crisis in living memory is a testament to ERC’s solid economic fundamentals,” Ahmed El-Houssieny, a managing director at Cairo-based Citadel, said in an e-mailed statement today.
Egypt, the Arab world’s most populous country, said the country’s oil refining capacity may double to 66 million tons over the next decade as mostly Asian companies spend $30 billion building new facilities.
The loan for the Egyptian Refining Co. has $2.35 billion of senior debt from institutions including Japan Bank for International Cooperation, Nippon Export and Investment Insurance, the Export Import Bank of Korea, the European Investment Bank and the African Development Bank, the Cairo-based firm said.
The funding also includes $225 million in subordinated debt from Mitsui & Co., which is part of the group of contractors building the refinery, and the African Development Bank, Citadel Capital said. Mitsui is providing $200 million, and the African Development Bank the balance.
“It’s one of their most economically sound investments, but it will take time to realize a profit on this project,” said Hatem Alaa, an equity analyst at HC Securities & Investment Co. in Cairo. “It’s positive for their fee business, but the real value generation is when they exit the investment and that will not be before 2014 when construction is complete.”
The refinery, to be built in the greater Cairo area, will produce 4 million tons of refined products when completed, including 2.3 million tons of EURO V diesel, Citadel Capital said. The Egyptian Refining Co. will sell its production to the state-owned Egyptian General Petroleum Corp. under a 25-year agreement at international prices, it said.
Citadel Capital shares increased 4.4 percent to 7.12 Egyptian pounds as of the 2:30 p.m. close in Cairo, valuing the company at 4.71 billion pounds ($830 million).