Aluminium Bahrain (Alba), the world’s largest smelter ex-China, has successfully achieved sustainability-linked refinancing for its $1.247bln syndicated loan facility in connection to the Line 6 Expansion Project.
Alba is the first Bahraini company to have achieved such sustainability-linked refinancing.
The senior-unsecured conventional and Islamic facility carries an interest margin of 235 basis points per annum over the sum of Secured Overnight Financing Rate (SOFR) and the Credit Adjustment Spread (CAS).
TWO TRANCHES
This new facility has an 8-year tenor and the principal amount will be repaid in 16 semi-annual instalments. The margin is subject to an adjustment (upwards or downwards) on an annual basis by an aggregate amount of up to 2.5 basis point tied to three sustainability-linked key performance indicators: Total Waste Recycled (Solid Waste), Training Hours and Lost Time Injury Frequency’s Incident Count, said a statement.
This facility comprises two tranches: a US Dollar-denominated senior unsecured conventional term-loan facility (the Conventional Facility) of $537.47 million and a US Dollar-denominated senior Shari’ah-compliant facility (the Islamic Facility) of $710 million.
Arab Banking Corporation (Bank ABC), Gulf International Bank (GIB) and National Bank of Bahrain (NBB) were the coordinators and underwriters of this transaction with NBB and Standard Chartered Bank serving as joint Environment, Social and Governance (ESG) Coordinators.
Vote of confidence
Alba’s Chairman of the Board of Directors Shaikh Daij bin Salman bin Daij Al Khalifa said: “The oversubscription in the refinancing of our existing syndicated loan facility by 3 times is a vote of trust in Alba, its fundamentals as well as the Kingdom of Bahrain. We are also equally pleased with the favourable terms of the new syndicated loan facility as we have dropped the interest margin from 300 basis points over LIBOR to 235 basis points over SOFR and CAS. Locking these new terms will allow us to invest in our future growth initiatives all the while giving back to our shareholders.
“Being the first Company in Bahrain to have tied the refinancing to sustainability-linked targets shows our strong commitment to ESG and will be a catalyst to make Alba’s sustainability performance stronger as we work collectively to meet Bahrain’s Net Zero Carbon Objectives by 2060.
“I also take the opportunity to thank the coordinators and underwriters for going above and beyond to effect the refinancing along with my management team in Alba,” he said.
Bank ABC’s Group Chief Executive Officer, Dr Khaled Kawan, stated: “Bank ABC is honoured to have been entrusted by Alba to act as Joint Coordinator, IMLAB and Underwriter for their debut, sustainability-linked term facility. This high-profile transaction exemplifies our role as a catalyst in accelerating the environmental transition in our own home market.
“We are leveraging the power of our size and the capital markets to mobilise the financing Alba needs to address these global challenges and opportunities. The positive response this facility has received in terms of oversubscription, pricing, and the number and diversity of participants, is indeed a testament to Alba’s outstanding credentials and the confidence in Bahrain’s economy.”
