Lenders Ask KIMA To Convert Capital To Foreign Currency
After approving to raise its capital to EGP 1.5 billion, the Egyptian Chemical Industries Company (KIMA) is asked again by the five lenders to convert its capital from local to foreign currency, creating a new obstacle to secure the US$ 423 million loan.
KIMA plans to get a loan from the National Bank of Egypt (NBE), Banque Misr, Commercial International Bank (CIB), Arab African International Bank (AAIB) and Banque Du Caire to finance its new factory in Aswan which requires investment cost of US$ 787 million.
A source at one the banks said KIMA met with the loan arrangers last week to agree on the finance, but the banks conditioned on the company to covert its capital to foreign currency in order to bear the increase in the dollar’s price against the Egyptian pound, but the company refused this condition.
Banks will not be able to bear extra burdens amid the current dollar shortage crisis as they are focusing their resources to import the country’s basic goods, the source explained.
The loan arrangers have agreed on their contributions to the loan as follows: NBE (US$ 90 million), Banque Misr (US$ 90 million), CIB (US$ 90 million), AAIB (US$ 90 million) and Banque Du Caire (US$ 63 million).
Eid Mohamed, chairman of KIMA, said the company engaged in a number of talks and meetings with a number of Arab banks to secure the loan required to finance the establishment of a new factory in Aswan and a new factory for producing the ammonia and urea after Egyptian banks did not commit to the terms sheet signed in May 3rd, 2013.
KIMA met with the Ministry of International Cooperation, National Bank for Development – Dubai, Arab Banking Corporation and BNP Paribas and asked International Islamic Finance Corporation – Jeddah to provide the required finance.
KIMA also plans to issue dollar-denominated bonds in the Egyptian Exchange (EGX) to receive dollar funds.
