Oman’s Salalah Methanol Co. has asked banks for a $720 million syndicated loan that the state-run petrochemical company would use for a new ammonia plant and refinancing purposes, banking sources said on Wednesday.

Bank Dhofar and Standard Chartered are advising the company on the financing, which is expected to have a 12-year maturity. Banks are expected to sunmit their commitments to the loan by the end of March, the sources said. 

Telephone calls and an email to Salalah Methanol seeking comment were unanswered.

Salalah Methanol has not given an exact indication of the potential interest rate of the loan, but a banking source said the borrower was looking at a rate in the low 300 basis points area over the London Interbank Offered Rate.

Banks interested in the deal were instead expecting an interest rate of between 350 and 375 bps over Libor, the source added, declining to be named because the matter is not public.

About one-third of the $720 million financing would be used to repay existing debt, with the balance used to back construction of the new plant, the sources said.

Canada's SNC-Lavalin was awarded an engineering, procurement and construction contract by Salalah Methanol to build the ammonia plant, its utilities and off-site infrastructure, SNC-Lavalin said earlier this week. The ammonia plant's project financing is expected to reach completion by the end of June, SNC-Lavalin said.

Salalah Methanol is 90 per cent owned by state-owned Oman Oil Co and 10 per cent owned by Takamul Investment Co.

It raised a loan of about $600 million in 2007 for construction of a methanol production facility in the Salalah Free Zone. Oman Oil provided 35 per cent of the project cost in equity, with the remainder coming from a syndicated loan involving regional and international banks.

The new project involves adding an ammonia plant to the existing methanol project.

Source :Times Of Oman