Chemanol signs 2 credit facilities worth SAR 695 mln with BSF, Alinma Bank

Logo of Methanol Chemicals Co. (Chemanol)

Methanol Chemicals Co. (Chemanol) signed two Sharia-compliant Murabaha financing agreements worth SAR 695 million with Banque Saudi Fransi (BSF) and Alinma Bank. 

The loans were obtained on July 7 with a term of eight and a half years ending December 2030, the firm said in a statement to Tadawul today, July 13. The company issued promissory notes as guarantees to the banks. 

The first Murabaha agreement worth SAR 455 million will help settle all outstanding loans with better terms and lower finance costs. This will result in a reduction in annual finance costs and an improvement in cash flows, which will enhance the firm's financial position and support its strategic objectives. 

The second Murabaha agreement worth SAR 240 million will finance the methanol plant expansion project. The deal will contribute to the completion of the expansion project, which is the mainstay of the company's future projects announced on March 2, 2020. This project will lead to sustainable profitability and reduce production costs of the company's products. 

Through the SAR 455 million facility, Chemanol aims to support its financial position and settle all outstanding loans to cut the finance costs, as the new funding has been obtained at competitive costs and terms. This is expected to have a positive financial impact on the firm through significant finance cost savings compared to the previous financing arrangements. 

On the other hand, the second facility aims to complete the methanol expansion project, which will increase Chemanol’s production capacity, as well as improve its profitability, as announced on Jan. 24, 2022. 

There are no related parties to the two agreements, the statement said.