• Home
• /
• Local business

Emirates Steel to Tap Markets for $600m

The company, which is held by Abu Dhabi Basic Industries Corp., also expects to complete a $700 million bridge loan extension by mid-October, pushing it back to next August.

Emirates Steel took up the $700 million loan in May 2008 to fund the first phase of development at its Mussafah factory. The second phase, expanding the plant, is due for completion 
by 2011.

“The bridge loan matures end of 2009 but we are extending it into August 2010. We are also going to the market in first quarter 2010 for a consolidated borrowing,” Stephen Pope, the company’s Chief Financial Officer, 
told Reuters.

“We are extending the loan to cover expenditure on phase one and refinance phase one and two into one consolidated final package. It is purely a roll-over to raise a consolidated debt.

France’s Natixis will again serve as advisor on the new issue which will include an Islamic tranche, Pope said.

“There seems to be a lot of interest from lenders because Abu Dhabi government-based businesses are a safe place for lending,” he said. State and corporate issuers in the world’s largest oil exporting region have raised more than $15 billion by issuing bonds over the last six months.

Emirates Steel’s plans are the latest from Abu Dhabi following issues from Aldar Properties, Dolphin Energy and the Tourism Investment & Development Co. Many are eyeing further sales as demand rises for high-rate emerging market debt and governments look to boost infrastructure spending to shelter the region’s economy from the global financial crisis.

Abu Dhabi is home to most of United Arab Emirate’s oil wealth. Current production at the Mussafah factory is about 1.8 million tonnes a year of rebars and wire rods. Last year, the factory had average production of about 60,000 tonnes a month or 720,000 tonnes 
a year.

The second phase of expansion will boost production capacity to 3 million tonnes a year. —