Zamil Industrial signs Murabaha facility with NCB for one of its subsidiaries

Eastern District Cooling Company, a wholly-owned subsidiary of Zamil Industrial Investment Company (Zamil Industrial), has signed with The National Commercial Bank (NCB) the first non-recourse project financing done in the region for a district cooling project.

Zamil Industrial had signed in November 2007 a 22-year energy performance contract with Saudi Basic Industries Corporation (SABIC) for the complete outsourcing of process and comfort cooling including the building of a central cooling plant to supply 20,000 TR within the premises of Saudi Iron & Steel Company (Hadeed) in Jubail Industrial City.

The total project size is valued at approximately SR 300 million and is expected to go on stream during 2010. NCB acted as Sole Mandated Lead Arranger for a 13.5-year Murabaha facility for an amount of SR 206 million. The sponsors will bring the remaining amount as equity. The project is being developed by Energy Central Company, and advised by Gulf International Bank (GIB).

The loan agreement was signed in Dammam on January 27, 2010 by Abdulla Al Zamil, Chief Executive Officer of Zamil Industrial, and Mansoor Durrani, Head of Project Finance, NCB, in the presence of Khalil Issa, CEO of Energy Central, and other representatives from Zamil Industrial, NCB and GIB.

Al Zamil stated: “We are delighted to achieve this major milestone towards the completion of this very challenging project. The strong teamwork of advisors and financiers supporting our project developer is greatly appreciated.”

Durrani added: “We are privileged to be a part of this wellstructured Islamic project finance deal. We anticipate that there will be a number of similar district cooling projects to be financed with similar structures in the GCC, and are pleased that Zamil is the first Saudi entity to close such a transaction.”

Drake & Scull International, together with Zamil Industrial, are building the project. Zamil Cool Care will be the Operator of the various facilities.

Baker & McKenzie acted as Lender’s legal counsel, CJR Consulting as the borrower’s counsel and FVB Energy as the Technical Consultant.