Saudi Aramco said to mull options to finance Sabic stake
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.