Dolphin Energy may agree to refinance $3.45bn loan

Abu Dhabi-based Dolphin Energy is close to agreeing a refinancing for a $3.45 billion (Dh12.6bn) loan that matures in July, banking sources close to the deal said. The new loan, for which Royal Bank of Scotland is advising, will include a $1.6bn commercial tranche and a $500 million Islamic facility, while there will also be a bond issue worth around $500m, the sources added. The 10-year loan facility will carry a margin of 275 basis points (bps) over Libor for the first three years, 300 bps to year six and then 350 bps thereafter, one of the sources added. The source also added that lenders have been have been gaining approvals to commit to the deal and the bank group should be finalised soon. The Dolphin gas pipeline project linking Qatar's giant North Field with the UAE and Oman was the first cross-border gas project in the Gulf region. It pumps around 2 billion cubic feet per day to the UAE. The project was financed in 2005 through a $2.45bn conventional facility and a $1bn Islamic loan. The financing, which paid a margin was 35-40 bps, matures in July. Mubadala Development, run by Abu Dhabi, owns 51 per cent of Dolphin, while France's Total and US Occidental each have a 24.5 per cent stake. The sponsors will provide a $1.2bn loan to the refinancing package, the sources told a news agency. A second banker said that the refinancing will set a pricing floor for all future project financings in the Arabian Gulf region. The banker added that the deal has been popular with lenders as it has the advantage that construction is already completed, so the deal bears no construction risk, as well as the presence of strong sponsors and a number of long-term, 25-year offtaker contracts. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .