DUBAI, (Reuters) – Saudi Basic Industries Corp. (SABIC) said it would begin borrowing nearly $9 billion in the next month, mostly in the United States, to fund its purchase of General Electric Co.’s plastics business.
SABIC bought GE Plastics for $11.6 billion in May in the largest Gulf Arab acquisition ever announced, and said at the time it would borrow around 75 percent of the cost.
“We will start in the next month,” Mutlaq al-Morished, SABIC’s chief financial officer, told Reuters on Wednesday.
“We will raise it through a mix of bonds, bank loans, and institutional loans, mostly in the United States, because that is the deepest market,” he said.
SABIC, the world’s largest petrochemical company by market value, would also raise some funds in Europe and the Middle East to fund the purchase, Morished said, without giving details.
SABIC is selling $1.3 billion of Saudi riyal-denominated Islamic bonds this month, but Morished said that was to fund its general business activity and not the GE Plastics purchase.
SABIC is investing as much as $30 billion to boost output to 80 million tonnes per year by 2012 from 50 million tonnes last year.
The company would borrow about $20 billion of that amount, Morished said.
In Europe and the United States, SABIC works with banks including Citigroup Inc. , JP Morgan, and ABN AMRO , Morished said.