SABIC subsidiary borrows $855m for PP expansion

04 July 2007 13:21  [Source: ICIS news]

MUMBAI (ICIS news)--Saudi Basic Industries Corp (SABIC) subsidiary Saudi European Petrochemical, also known as Ibn Zahr, has borrowed $855 million in an Islamic loan to finance expansion plans, a spokesperson for the company said on Wednesday.

Ibn Zahr plans to expand its 640,000 tonne/year polypropylene plant in the Gulf coast city of Al-Jubail by 500,000 tonnes/year.

The plant is expected to come on stream in 2008, and the company has invested $1.1bn to fund the expansion, the spokesperson said.

SABIC holds 80% in Ibn Zahr, with Dammam-based Arab Petroleum Investments Corp and Milan-based Ecofuel each owning 10%.

Ibn Zahr borrowed the money under a murabaha facility from a consortium of Saudi and international banks, SABIC said in a statement, without naming the lenders.

In murabaha deals, a financer buys a commodity and sells it to the customer at a higher price, complying with Islam’s ban on interest on lending.

SABIC affiliate National Industrial Gases had also borrowed $400 million in April to fund an expansion project.

By: Divya Chowdhury
+65 6780 4359

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