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Sabic granted permission by CMA to raise sukuk size to $2b

JEDDAH — The Saudi Capital Market Authority (CMA) has granted permission to the Saudi Basic Industries Corporation (Sabic ) to increase the size of its sukuk (Islamic bonds) up to $2.133 billion (SR8 billion).

Earlier, the CMA issued the licence to Sabic to issue sukuk on July 9 fixing the upper limit at US$1.333b (SR5b), according to information available on the Saudi stock exchange (Tadawul) Web site on Sunday.

Sabic, which reported a 45 per cent increase in net profits to $3.413b (SR12.8b) for the first half of 2007, launched its second sukuk earlier this month. The Shariah-compliant sukuk will be available to investors in Saudi Arabia and the Gulf Cooperation Council (GCC) countries.

Sabic mandated HSBC Saudi Arabia Limited and Riyad Bank as lead managers and book runners for the sukuk issuance. Sabic successfully launched its first sukuk in July 2006.

Last year it launched a major strategic project Sabic 2020.

"Sabic's basic goal is to define the path to ambitious growth in the next 15 years," Mohamed Al Mady, Sabic vice chairman & CEO, said in the company's annual report for 2006, which was released recently.

However, on Sunday, Sabic's shares declined by 1.76 per cent to $33.466 (SR125.50). For the last six trading days, its shares were in positive territory for just two days while all other days its shares were in the red.

Sabic's shareholder's equity increased to $19.534b (SR72.88b) in 2006, compared to $16.624b (SR62.34b) in 2005 and $13.568b (SR50.88b) at the end of 2004. Its current assets also rose to $16.085b (SR60.32b) in 2006 from $12.170b (SR45.64b) in 2005 and $9.394b (SR35.23b) in 2004.

Sabic has achieved tremendous growth over the years. "We anticipate continuing strong growth in all our main markets over the coming years and steadily increasing our market share in targeted sectors," Al Mady said.

Sabic has also embarked on a major expansion programme to build its global presence and aid the development of the kind of long-term business relationships that provide the essential foundation for future prosperity. The year 2006 was another year of substantial investment in Sabic's future.

Sabic's affiliate Saudi European Petrochemical Company (IBN ZAHR's) new $1b polypropylene-3 plant under construction in AI-Jubail, remains on course to go on line in 2008, adding 500,000 metric tons annual capacity in polypropylene.

Yanbu National Petrochemical Company (YANSAB's), the new Yanbu complex plant is also set for a 2008 startup, supplying among other products 500,000 metric tonnes of LLDPE, 400,000 metric tonnes of HDPE and 400,000 metric tonnes of polypropylene a year.

Eastern Petrochemical Company (SHARQ) agreed loans total US$2.43b to finance its third expansion project in Al-Jubail Industrial City. The new plants are due to go on stream in 2008, producing among other things 400,000 metric tons of HDPE and 400,000 tonnes of LLDPE.

The Saudi Petrochemical Company (SADAF), already running the world's single largest conventional production site at Al-Jubail, plans to build a third world-scale plant, boosting styrene production by over 60 per cent, making it the world's largest single-complex styrene producer by 2010.

The Saudi Methanol Company (AR-RAZI) is part-way through its fifth expansion project, AR-RAZI-5, due to go on stream in 2008 offering an annual capacity of 1.7 million metric tonnes of methanol.

Last year, Sabic also acquired Huntsman Petrochemicals (UK) Ltd. for US$685 million which is now renamed Sabic UK Petrochemicals.

This acquisition gives Sabic Europe a cracker and aromatics complex, along with a new 400,000 metric tonnes capacity LDPE plant, currently under construction in the UK and due to come on stream by end 2007.

US conglomerate General Electric sold its global plastics division, GE Plastics, to Sabic for $11.6b in May this year.