RIYADH, 6 December 2007 — Islamic financing agreements worth SR1.7 billion were signed here on Tuesday for the development of the third container terminal project of the Jeddah Islamic Port .
The agreements were inked between the Red Sea Gateway Terminal Company Limited (RSGT) and Al- Rajhi Bank in the presence of Malaysian Ambassador Dato Ismail Ibrahim. The signatories to the agreement were Saeed Al-Ghamdi, deputy chief executive officer of Al-Rajhi Bank and Mohamed Zainel Alireza, chairman of RSGT. Al-Rajhi Bank and The Standard Bank of South Africa have jointly provided the financial advice for RSGT which is implementing the development on a build-operate-transfer (BOT) basis.
“The Al-Rajhi Bank-Standard Bank consortium was chosen as the financial advisor due to their wealth of experience in providing project finance advisory, their strong multi-disciplinary advisory team and their extensive experience in comparable projects worldwide,” Alireza said.
The container terminal to be built at an estimated cost of about SR1,900 million will be funded in a debt-to-equity ratio of 69:31. The equity for RSGT would be provided by the project’s founding shareholders, including SISCO, Xenel Industries, Tusdeer and City Island Holdings Limited, a subsidiary of the Malaysian company MMC International.
The SR1.7 billion Islamic financing facilities has been fully underwritten by Al-Rajhi Bank, which includes SR1.275 billion Ijara facility to cover most of the equipment and construction-related costs to be incurred during the three-year construction period. Al-Rajhi Bank would provide SR900 million and Saudi Fransi Bank would provide SR375 million in the Ijara facility for RSGT. The remaining SR425 million Islamic facilities being provided by Al-Rajhi Bank for RSGT would include a standby facility, a working capital facility and a letter of credit for equipment supply.
The Ijara facility structured as a forward lease would have a tenor of 16 years. The banks would appoint RSGT as their agent during the construction period of 3 years for procurement of the Ijara assets and they would provide the Ijara financing for procurement of these Ijara assets. After the construction period, the banks would own the Ijara assets and lease these assets to RSGT. This Ijara structure known as “Ijara Mawsufah Fi Al-Dhimmah” has been approved by Al-Rajhi Bank’s Shariah Board.
Red Sea Gateway Terminal has engaged China Harbor Engineering Company Ltd. for civil construction and Shanghai Zhenhua Port Machinery Co. Ltd. (ZPMC) of China for supply of cranes and other equipment.
The terminal, with a 740m long main berth, a 390m long feeder berth and a draft of 18m, will have an annual container handling capacity of 1.5 million TEUs. It will also have its own dedicated 16.5m deep channel linking the Jeddah Islamic Port’s main channel.
The terminal, design carried by Halcrow International of UK, will accommodate to serve the next generation of container ships. The two berths are planned to be ready for operations during the fourth quarter of 2009.
