Saudi Basic Industries Corp. and Exxon Mobil Corp. will borrow $1.2 billion from banks for expansion of their joint venture petrochemicals project in the kingdom, two people familiar with the deal said.
Al-Jubail Petrochemcial Co., known as Kemya, will raise a total of $2.2 billion through a mix of shareholder loans and bank debt, said the people, who asked not to be identified because the information is private. The funding will have a tenor of 10 years, they said.
Kemya is building a specialty-elastomer plant on the kingdom’s Persian Gulf coast that will produce 400,000 tons of rubber products a year, which will be sold in Saudi Arabia and exported to the Middle East and Asia. Construction contracts were awarded in June 2012 with production expected to begin in the second half of 2015.
A $900 million loan from 10 local and international banks will be backed by Sabic, while Exxon Mobil will guarantee a $100 million facility from non-Saudi banks. Kemya will also borrow about $200 million in Saudi riyals in a non-guaranteed loan, the people said.
As part of the financing, Exxon Mobil will also provide a shareholder loan of $900 million, while Sabic will contribute $100 million, one of the people said.
A spokesman for Sabic wasn’t immediately available for comment, while a spokeswoman for Exxon Mobil in Qatar didn’t immediately respond to a phone message.