ADES International in $450 million syndicated loan

Facility to fund the oil and gas business’ expansion and to repay existing debt

Oil and gas company ADES International secures $450 million syndicated loan facility.Jaime Puebla / The National

ADES International Holding is borrowing $450 million in a five-year syndicated credit facility to fund acquisitions in the wake of its initial public offering last year, as well as to repay existing debt.

The London-listed Middle East and Africa oil and gas drilling and production services company is borrowing the money at a cost of 5 per cent over LIBOR per year in three tranches from 11 banks in a facility that is being jointly arranged by Bank of America Merrill Lynch and the European Bank for Reconstruction and Development. The Egyptian investment bank EFG-Hermes acted as the financial advisor.

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“As previously communicated in our recent 2017 results announcement, this facility, together with the proceeds of ADES’ May 2017 initial public offering on the London Stock Exchange, will allow us to consolidate our borrowings and enhance ADES’ purchasing power,” said Mohamed Farouk, chief executive of ADES International.

“At a time when ADES is participating in a number of tenders and screening accretive acquisitions across our core Middle East markets, this facility provides further financial flexibility and expands the range of opportunities that we are able to consider and act upon swiftly.”

The loan will be disbursed in three tranches of $200m, $41.5m and $208.5m.

The Dubai-based company has two existing credit facilities that mature in 2020 and 2021.

The company said last year that it planned to use the proceeds of the share sale for capital expenditure to scale up existing operations in Egypt, Saudi Arabia, and Algeria, and to pursue new opportunities across the GCC.

ADES’s earnings before interest tax, depreciation and amortization grew 46 per cent on a compound annual growth rate between 2014 and 2016 even as oil prices fell.