Aluminium Bahrain (Alba), the Bahrain-based aluminium smelter, has taken the next step to finance its landmark Line 6 expansion project, closing a €204.5mn facility backed by the French and German export credit agencies.
It includes a €156.9mn facility backed by Bpifrance with an interest margin of 60 basis points (bps) over Euribor. Citi, Standard Chartered and Crédit Agricole acted as mandated lead arrangers, while Standard Chartered was also the facility agent for Bpifrance.
Another €47.6mn is guaranteed by Euler Hermes with an interest margin of 55 bps over Euribor, with Commerzbank acting as the mandated lead arranger and facility agent.
Both facilities have an 11-year tenor, in which the principal amount is to be repaid over a 10-year period.
The facilities cover the first part of the second tranche of export credit agency-covered financing for Alba’s Line 6 expansion project, which is said to be one of the biggest brownfield expansions in the Middle East region. Specifically, they will fund a green anode plant, gas treatment centres, pot tending machines and an anode bake furnace, as well as related equipment.
The first ECA-backed tranche of US$700mn for the project was closed in July last year and was backed by the Swiss Export Risk Insurance (Serv) and Euler Hermes, with JP Morgan acting as the ECA co-ordinator.
This followed the closure of a US$1.5bn syndicated term-loan facility with regional and international banks in October 2016 – the largest corporate loan in the history of Bahrain. While Alba originally targeted US$500mn to US$750mn, the facility was heavily oversubscribed, which lead to the company upsizing the loan.
Alba will now look to secure the final part of the second ECA-backed tranche “as we progress with the construction” of the project, says Alba’s chairman, Shaikh Daij Bin Salman Bin Daij Al Khalifa, in a statement.
He adds that the support from banks and ECAs represents “a vote of confidence in Bahrain, Alba and its landmark Line 6 expansion project”.
Metal production from the new plant is expected to start in early 2019. According to Alba, it will boost its annual output by 540,000 tonnes, bringing the total production capacity to 1,500,000 tonnes per year, thus making it the world’s largest single-site aluminium smelter complex.