Crédit Agricole advised on a US$1.12bn loan to help Saudi Arabia’s electricity company, Saudi Electric, purchase equipment required to expand existing power generation plants and support the construction of a new plant.

The deal closed in June 2009 and specifically supported a contract between the Saudi firm and the US engineering firm GE.

The transaction features direct loans from export credit agencies US Ex-Im and Canada’s EDC, and potentially heralds the opening up of the Saudi market to further ECA financing.

This is the first corporate loan made directly into Saudi by either US Ex-Im or the EDC, and it is also the first time the Saudi corporate has secured ECA financing.

The deal also set further benchmarks in that it is the first direct loan co-financing provided by the two ECAs under a single documentation.

André Gazal, head of ETF, North America, at Crédit Agricole CIB, worked on the deal. He adds: “The transaction represents a first in many respects. It is also GE’s largest single transaction supported by US Ex-Im and EDC.”

Saudi Electric initially approached Crédit Agricole CIB for financing in order to support a contract it signed with US engineering firm GE in December 2006 for turbines to be delivered in 2008-09.

The company was looking to purchase gas turbines to increase the power generation capacities in its Riyadh PP8 plant by 491MW and Faras in the Eastern province by 509MW, as well as to build a new plant generating 1,907MW at its Al Qurrayah site in the eastern province of Saudi Arabia. The 23 GE turbines will provide 2,907MW in additional electric capacity in Saudi Arabia.

To support this turbine contract, it was originally proposed that the loan would be guaranteed by US Ex-Im, with Crédit Agricole CIB acting as the mandated lead arranger, with the facility possibly being syndicated to a couple of banks.

However, the economic crisis negatively affected the margins on the loan to such a degree that Saudi Electric requested a financing alternative, to which Calyon proposed a direct loan.

As a result, both US Ex-Im and EDC were requested to provide a direct loan, and Calyon continued in its role as an advisor as well as assuming the role of payment agent for the direct loans.

Under the terms of the financing, there was no equity injection in the project, with the deal only involving direct loans from the ECAs. US Ex-Im extended US$912mn and EDC provided US$200mn.
Deal information

Borrower: Saudi Electric
Amount: US$1.12bn
Advisor and ECA agent: Crédit Agricole CIB
Tenor: 12 years
Date signed: June 2009