Riyadh: Saudi Basic Industries Corp., the world’s largest petrochemicals maker by market value, is in talks with banks to raise as much as $2 billion (Dh7.34 billion) of loans, according to two people familiar with the matter.
Sabic, as the company is known, has asked lenders to give indications on loan pricing across several different tenors, the people said, asking not to be identified because the discussions are private. Proceeds from the deal may be transferred to Saudi Kayan Petrochemicals Co., in which Sabic holds a 35 per cent stake, the people said. Sabic held similar consultations last year, but didn’t proceed with a transaction, they said, adding that current talks are also at an early stage and the company may decide not to proceed.
Sabic faces a challenging year in 2017 and needs to focus on improving efficiency, chief executive officer Yousuf Al Benyan said in October. The company is combining its polymers and chemicals units to save money on feedstock and is restructuring its metals business and folding it into a steel company, he said. Sabic reported a 6.8 per cent drop in third-quarter profit due to lower selling prices for its products and slower growth in major markets including China.
Loan volumes in the Middle East rose 7 per cent last year to almost $101 billion, their highest since 2007, according to data compiled by Bloomberg, as government’s and companies borrowed to bridge budget deficits caused by lower oil prices and in anticipation of rising interest rates.
A spokesman for Sabic declined to comment.
— Bloomberg
