Saudi Aramco said to mull op­tions to fi­nance Sabic stake

Arabian Business English - - SPOTLIGHT -

SAUDI ARAMCO IS STILL

con­sid­er­ing a range of op­tions to fi­nance the ac­qui­si­tion of a con­trol­ling stake in the coun­try’s largest chem­i­cal com­pany, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter.

Aramco, the world’s largest oil pro­ducer, is un­der­tak­ing due dili­gence on the deal – likely to be Saudi Ara­bia’s big­gest ever at up to $70bn – and will de­cide on a fi­nan­cial struc­ture next year, sources have said.

The Wall Street Jour­nal

re­ported last Mon­day that Aramco had aban­doned the idea of rais­ing a record­break­ing bond to pay for the Sabic stake. In­stead, the com­pany could use a com­bi­na­tion of syn­di­cated loans and bonds raised on Sabic’s bal­ance sheet, the news­pa­per re­ported.

One other op­tion un­der con­sid­er­a­tion: stag­ger­ing pay­ments over a pe­riod of time, it said.

The idea of struc­tur­ing the deal like a lev­er­aged buy­out, al­low­ing Sabic’s bal­ance to take the strain, has two ad­van­tages. One, it would sig­nif­i­cantly re­duce the amount of fi­nan­cial dis­clo­sure re­quired by Aramco. Sec­ond, Sabic al­ready has a track record as a bond is­suer, re­duc­ing the amount of prepara­tory work re­quired.

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