Petrochem subsidiary inks SAR 3 bln refinancing agreement with Samba, Riyad Bank

National Petrochemical Co. (Petrochem) announced on Sunday that its subsidiary, Saudi Polymer Company, signed financial agreements to refinance its existing project financing loan of SAR 3 billion with Samba Financial Group and Riyad Bank.

The company said in bourse filing that credit facility duration is 4 years to be paid in 8 semi-annual scheduled installments starting June 2020 and ending December 2023. The facility is guaranteed by promissory notes.

Saudi Polymer Company obtained the original project financing loan before the project’s construction started with some strict conditions such as reserve account requirements as a guarantee for the credit facilities.

The subsidiary decided to refinance the original loan in order to obtain better financing terms since the project has reached stable operating rates and improved financial conditions.

A large portion of the loan has been already paid off using the reserved accounts of SAR 1.762 billion, which in turn helped to lower the new refinanced loan amount.

The refinancing process will not necessarily increase Petrochem’s ability to dividend more dividends to its shareholder in the near term, the statement noted.

Petrochem board member Eyad Al Hussain is a related party since he is a board member in Samba Financial Group.

The original loan amount was SAR 13.458 billion obtained from the Saudi Industrial Development Fund, the Public Investment Fund, and 19 commercial banks, of which 9 were local banks. The first repayment started in 2013 and was planned to be fully repaid by 2023.

The new refinanced loan is also scheduled to be fully repaid by the end of 2023, Petrochem said.

Saudi Polymer Company is owned 65% by Petrochem, and 35% by Arabian Chevron Phillips Petrochemical Company Limited.

It is worth mentioning that this refinancing is not directly related to the capital reduction plan at the Saudi Polymer Company, which was announced on Tadawul on Sept. 25, 2019.

The process is ongoing and will be announced once it is achieved, the statement added.