Milbank Represented the Lenders in the US$12.5 billion Financing for Sadara Integrated Chemicals Project

The second phase of the financing for the construction of Sadara Chemical Company’s integrated petrochemicals production complex in Jubail Industrial City II, Saudi Arabia was signed on 16 June, raising an aggregate of US$12.5 Billion. Sadara is a joint venture between The Dow Chemical Company and Saudi Arabian Oil Company. Milbank acted as international counsel to all of the lenders to the Project as well as to the joint lead managers of Sadara’s earlier US$2 billion Sukuk issuance (which was amongst the world’s largest project bonds).

This financing is the largest ever multi-sourced project financing in the petrochemicals sector and among the largest project financings undertaken in the EMEA region. This integrated hydrocarbon and chlorine-based production complex will include 26 manufacturing units (notably a mixed feed steam cracker and an aromatics plant) as well as three on-site third party process units, and extensive supporting infrastructure. The project is strategically important to Saudi Aramco, Dow Chemical and The Kingdom of Saudi Arabia.

This phase of the financing involved the participation of seven export credit agencies, including COFACE (of France), Euler Hermes (of Germany), FIEM (of Spain), K-Exim and K-sure (both of Korea), UK Export Finance (of the United Kingdom) and US Ex-Im Bank (of the United Sates). The lenders included Saudi Arabia’s Public Investment Fund, as well as Saudi and international commercial banks and Islamic institutions participating in Wakala and Procurement facilities.

The Milbank deal team was led out of the firm’s London office and involved members of the firm’s Project Finance, Islamic Finance, Securities, Tax and Financial Regulatory teams.

“This was as big and complicated as it gets, and we were honoured to have been able to play a role in bringing it to a successful signing. It took a high level of cooperation by the lenders, the sponsors and all of the legal teams involved” said Phillip Fletcher, “and shows that even the most complex, multi-sourced financings can be accomplished on schedule when the parties are committed to doing so” he added.

Located in the Eastern Province of Saudi Arabia, the complex is projected to be the world’s largest integrated chemical compound ever built in a single phase with a capital cost of around US$19 Billion. First production units are expected to come on line in the second half of 2015, with all production units coming on line in 2016.

Dow Chemical is advised by Shearman & Sterling LLP, and Saudi Aramco by White & Case LLP. The Law Office of Abdulaziz H. Al Fahad are Saudi Arabian counsel to the lenders, and Hatem Abbas Ghazzawi & Co. are Saudi Arabian counsel to Dow Chemical.

About Milbank

Milbank, Tweed, Hadley & McCloy LLP is a leading international law firm that has been providing innovative legal solutions to clients throughout the world for more than 145 years. Milbank is headquartered in New York and has offices in Beijing, Frankfurt, Hong Kong, London, Los Angeles, Munich, São Paulo, Singapore, Tokyo and Washington, DC.

The firm’s lawyers provide a full range of legal services to the world’s leading commercial, financial and industrial enterprises, as well as to institutions, individuals and governments. Milbank’s lawyers meet the needs of its clients by offering a highly integrated and collaborative range of services across key practice groups throughout its global network. Milbank’s integrated practice is underpinned by its attorneys’ acknowledged technical excellence, sectoral expertise and a strong tradition of innovation and client service.