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Middle East

CASE STUDY: Equate Sets M&A Financing Benchmark with Dual Tranche Bridge Loan

Kuwait-based Equate Petrochemical’s US$6bn conventional and Islamic dual-tranche acquisition bridge loan was one of the largest deals of its kind in the region, maximising stakeholder liquidity while helping to create a regional petrochemicals powerhouse.

Sep 12, 2016 // 4:48PM

Deal At A Glance

Deal Type: Loan
Deal Structure: Dual-tranche Senior Unsecured Term Loan and Murabaha Acquisition Bridge Facilities
Borrower: Equate Petrochemical Company 
Sponsors: Dow Chemicals and PIC/KPC
Governing Law: UK Law
Global Coordinators and MLAs: Citi, HSBC, JP Morgan, NBK, KFH
MLAs: Intesa, Mizuho, BTMU, SMBC, NBAD
Lead Arrangers: ING, ICBC, EDC, CBK
Tax Advisor: PwC
Investment Agent: KFH
Legal Advisors to Obligor: Latham & Watkins
Legal Advisor to JLMs: Linklaters
Size: US$6bn
Issue Date: December 2015
Maturity dates: December 2016 (with 6-month extension option)
Yield: Confidential
Reoffer price: 100.00% 
Spread: 5Y MS+588.8bp
Date of Issue: 10 May 2016
Use of Proceeds: To increase the bank’s available capital


In October 2015, Equate announced plans to acquire Dubai-based ME Global, a fully integrated global supplier of Polyethylene (PE) and Ethylene Glycol (EG) and previously owned by Dow and Petrochemical Industries Company (PIC) in a 50-50% JV.

The successful combination of Equate and ME Global created a global platform for the production and distribution of PE and EG as well as other petrochemicals supported by distributed sourcing capabilities.

Equate raised a 364-day (plus one 6-month extension option at the borrower's discretion) US$6bn credit facility, to back the US$3.2bn acquisition of ME Global and to refinance existing debt. The company’s main objectives were to secure flexibility in terms of pricing, covenants and terms.

The US$6bn dual-tranche transaction was one of the largest bridge acquisition financing transactions in the region for the last decade, and the largest acquisition financing deal in Kuwait to date.

Transaction Breakdown

The acquisition financing bridge contained the following tranches: US$5,5mn 1-year conventional term loan, and a US$500mn 1-year Murabaha facility.

Negotiation on the transaction started in May 2015, when the oil prices globally began falling quickly, and the facility was signed in December 2015.

The facility was oversubscribed by US$3.5bn, which allowed for material scaleback for the underwriting banks, and received a strong response from a geographically diverse group of 10 regional and international lenders.

Syndication was broken down into two stages, where a smaller group of relationship banks of Equate, ME Global, Dow and PIC/ KPC was initially brought in to participate with the deal, after which a broader group of banks were then brought into the transaction including NBAD, CBK, Doha, Intesa Sanpaolo, Mizuho, SMBC, BTMU, Export Development Canada, ICBC and ING. Regional banks accounted for 30% of the liquidity used in the transaction while international lenders accounted for 70%.

The Islamic tranche, which saw tight pricing in the 60bp area, allowed the company to maximise liquidity and accommodate some of its key relationship banks.

Both facilities are unsecured and are expected to be refinanced with a long term syndicated facility and in the capital markets, which includes a long-term US$5bn syndicated loan signed with a range of lenders earlier this year.

Middle East Deals Islamic Finance

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