Abu Dhabi-based Emirates Steel is finalising plans to consolidate its debt financing and intends to launch the first major project finance transaction in the GCC in the first quarter of 2010, the company said in a statement.

Emirates Steel is wholly-owned by Abu Dhabi’s state-owned General Holding Corporation (GHC) through Abu Dhabi Basic Industries Corporation (ADBIC).

The company said it was looking to raise $1.5 billion through limited recourse financing to cover the financing needs of its first and second phase of the expansion projects.

In the fourth quarter of 2009, Emirates Steel successfully extended its $700 million Bridge Loan Facility. The extension was significantly over-subscribed and added a number of additional banks to the company’s lending group, the statement added.

In June 2009, the company had inaugurated the first phase of a dual-phased expansion plan, which has transformed the company from a simple steel processor to the first fully-integrated steel manufacturer in the UAE.

Emirates Steel said completion of the project's second phase will boost its output capacity, and make it the only producer capable of rolling jumbo and heavy sections in the Middle East.

Emirates Steel’s $2.5 billion total expansion plan is being currently funded by GHC equity and the company’s $700 million Bridge Loan. It will now focus on arranging funding on a long-term stand-alone basis.

The cornerstone of this funding will be limited-recourse project financing that is planned to close in the first half of 2010, the company said. 

Following the success in the extension of the Bridge Loan, and based on the considerable interest expressed by local, regional and international banks, Emirates Steel is confident that a competitively-priced Project Finance structure will be established in the first half of the current year, the statement added.-TradeArabia News Service