Sipchem subsidiary inks SAR 700 mln Murabaha refinance facility with Riyad Bank

Sahara International Petrochemical Co.’s (Sipchem) subsidiary International Polymers Company (IPC) signed today, Dec. 27, 2020, a SAR 700 million Murabaha facility agreement with Riyad Bank to refinance the existing syndicated bank facility and loan from the Public Investment Fund (PIF).

The new facility provides favorable terms, pricing, and converts the existing project finance into a pure Sharia-structured facility, the company said in a bourse filing.

The original syndicated facility was SAR 704 million, while PIF loan amounted to SAR 704 million. The total outstanding amount to be refinanced is SAR 750.81 million.

IPC will drawdown the full amount of the new facility. The internal cash sources will fund the difference between the amount to be refinanced and the new facility, the statement noted.

The maturity date of the existing syndicated bank facility was 2026, while the PIF loan was due in 2027. The new Murabaha financing's maturity date is now in 2027, with a grace period of 18 months from the date of refinancing. However, there will be a 30% bullet payment due at the final maturity date.

The rescheduled facility is unsecured and not backed by corporate guarantees.

With the execution of the Murabaha loan facility, Sipchem’s entire loan portfolio will be completely Sharia-compliant.

IPC is 75% owned by Sipchem and 25% owned by Hanwha Chemical Overseas Holdings Co. Ltd.