Saudi Aramco, PIF approve amending SABIC acquisition payment terms

Saudi Arabian Oil Co. (Saudi Aramco) said it inked an agreement on Oct. 6, 2019, with Saudi sovereign wealth fund, Public Investment Fund (PIF) to amend the payment terms of the $69.1 billion worth of the acquisition of a 70 percent stake in Saudi Basic Industries Corp. (SABIC).

Under the new amendments, a 36 percent of the deal value will be paid in cash upon the close of the deal, and the remaining 64 percent will be settled in the form a loan arranged by the seller.

The loan will be guaranteed by four promissory notes issued by Saudi Aramco for the Saudi PIF.

The state oil giant will pay the loan interest to the PIF upon the close of the deal; expected on H1 2020, in the form of a cash payment at $500 million, in addition to five promissory notes at a total value of $2.5 billion.

The seller loan and the remaining balance of the loan interest guaranteed by the promissory notes will become due and payable as follows:

- On or before Sept. 30, 2020, a loan interest of $250 million;

- On or before Sept. 30, 2021, an amount equal to 16 percent of the purchase price plus a loan charge of $250 million;

- On or before Sept. 30, 2022, an amount equal to 16 percent of the purchase price;

- On or before Sept. 30, 2023, an amount equal to 16 percent of the purchase price plus a loan charge of $750 million;

- On or before Sept. 30, 2024, an amount equal to 16 percent of the purchase price plus a loan charge of $750 million;

- On or before Sept. 30, 2025, a loan charge of $500 million.

In March, state oil giant Saudi Aramco signed a share purchase agreement to acquire a 70 percent majority stake in SABIC from the PIF. The private transaction was signed for SAR 259.125 billion, or SAR 123.39 per share, which is equivalent to $69.1 billion, Argaam reported.