Aluminum Bahrain (Alba), the world’s largest Aluminum smelter ex-China, has become the first Bahraini company to have successfully achieved sustainability-linked refinancing for its $1.247 billion Syndicated Loan Facility in connection with the Line 6 Expansion Project.
According to the company statement, the $1.247 billion senior-unsecured Conventional and Islamic Facility carries an interest margin of 235 basis points per annum over the sum of the Secured Overnight Financing Rate (SOFR) and the Credit Adjustment Spread (CAS).
This new facility has an 8-year tenor and the principal amount will be repaid in 16 semi-annual installments.
As per the statement, “The margin is subject to an adjustment (upwards or downwards) on an annual basis by an aggregate amount of up to 2.5 basis points tied to three sustainability-linked key performance indicators: Total Waste Recycled (Solid Waste), Training Hours and Lost Time Injury Frequency’s Incident Count.”
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.
“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 favorable 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.”
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, the company noted.
Dr. Khaled Kawan, Group CEO of Bank ABC said that, “Bank ABC is honored 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.”
The Chief Executive Officer of GIB, Mr. Jamal Al Kishi stated that, “We are delighted to have had the opportunity to support Alba on this landmark refinancing, which underscores the Company’s commitment to sustainable development and growth. Investors who took up the offering have indeed expressed a strong vote of confidence in Alba and its future, and just as importantly underscored the robust appetite they have for ESG-linked exposures.”
“The fact that this financing brings together Alba, and NBB, respectively Bahrain’s first and second-ranked Bahrain Bourse companies in terms of ESG (according to rating agency ESG Invest) is a testimony of the sustainability drive within the Kingdom. As a national enabler, we are proud to take part in furthering the Kingdom’s Economic Vision 2030,” commented Mr. Hisham Al Kurdi, Chief Executive – Corporate Institutional & Investment Banking at the National Bank of Bahrain.