27 Apr 2022

Alba Becomes First Company in Bahrain to Refinance its Existing Syndicated Loan of c.US$1.247 Billion Tied to Sustainability Linked Targets

Aluminium Bahrain B.S.C. (Alba), the world’s largest smelter ex-China, is the first Bahraini Company to have successfully achieved sustainability-linked refinancing for its US$1,247,475,000 Syndicated Loan Facility in connection to the Line 6 Expansion Project.

The US$1,247,475,000 senior-unsecured Conventional and Islamic Facility carries an interest margin of 235 basis points per annum over the sum of 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 instalments. The margin is subject to an adjustment (upwards or downwards) on an annual basis by an aggregate amount of up to 2.5 basis point 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 US$537,475,000 and a US Dollar-denominated senior Shari’ah-compliant facility (the Islamic Facility) of US$710,000,000.

Arab Banking Corporation B.S.C. (Bank ABC), Gulf International Bank B.S.C. (GIB) and National Bank of Bahrain B.S.C. (NBB) were the Coordinators and Underwriters of this transaction with NBB and Standard Chartered Bank serving as joint Environment, Social and Governance (ESG) Coordinators.

Commenting on this occasion, Alba’s Chairman of the Board of Directors Shaikh Daij bin Salman bin Daij Al Khalifa said:
“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 favourable 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.
I also take the opportunity to thank the coordinators and underwriters for going above and beyond to effect the refinancing along with my Management team in Alba.”

Bank ABC’s Group Chief Executive Officer, Dr. Khaled Kawan, stated:
“Bank ABC is honoured 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.
We are leveraging the power of our size and the capital markets to mobilize the financing Alba needs to address these global challenges and opportunities. The positive response this facility has received in terms of oversubscription, pricing, and the number and diversity of participants, is indeed a testament to Alba’s outstanding credentials and the confidence in Bahrain’s economy.”

The Chief Executive Officer of GIB, Jamal Al Kishi, stated:
“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. GIB itself recently became the first Bahrain-Headquartered bank and the first majority Saudi-owned bank to issue a sustainably-linked syndicated loan. Helping our clients in the region with solutions aimed at achieving world-class sustainability objectives is a core focus of ours.”

“The National Bank of Bahrain is pleased to have been appointed as the Joint Sustainability Coordinator, Initial Mandate Lead Arranger and Bookrunner on Alba’s sustainability-linked term facility. We are also delighted to see that the transaction has achieved all the objectives set by Alba at the beginning of the mandate and, at the same time, attracted substantial oversubscription from a wide range of lenders. 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,” said Hisham Al Kurdi, Chief Executive – Corporate Institutional & Investment Banking at National Bank of Bahrain.

The new syndication was oversubscribed by US$2.6 billion and comprises 21 banks.

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