In September 2009 Lafarge Cement Syria closed the first private project financing in Syria – $340 million of five to seven-year debt for a $682 million cement plant in Aleppo, in the north of the country.

While the project received weighty support from multilaterals and Danish export agency, EKF, both the Syrian pound denominated and dollar tranches offered to commercial banks were heavily oversubscribed. This was a significant achievement, given the backdrop of the global financial crisis and the fact that Syrian banks generally do not lend beyond one or two years and came in at five years.

The $341 million debt is split into dollar and Syrian pound-denominated tranches. The deal was lead arranged by Bank Audi, and features the EIB, Proparco and EKF. The EIB came in with $155 million split equally between an EKF-guaranteed tranche and a direct loan. The Danish export credit agency, EKF, is participating on the back of EPC contractor FL Smidth. There was also a Syrian pound-denominated tranche equivalent to $100 million. The remaining $86 million was included in the dollar-denominated club tranche.

The funding was provided to one of Lafarge's subsidiaries, Lafarge Cement Syria, enabling the refinancing of a bridge facility and the completion of the construction phase of the project.

A three phase structure was adopted for the financing whereby the terms will start on the basis of recourse to the sponsors, but are gradually reduced and then removed to a non-recourse structure on the achievement of certain construction and performance milestones and the fulfillment of various local law requirements.

The financing was documented in English law and the security agreements in Syrian law. There were some difficulties in transferring dollars that had to be overcome, but despite being an emerging market credit the deal progressed relatively smoothly to financial close. A term sheet was discussed in March and April 2009, due diligence thereafter, a commercial bank launch at the end of June with financial close in September.

Lafarge Cement Syria
Status: Financial close September 2009
Description: $340 million equivalent project finance facility for Lafarge's greenfield cement plant in Aleppo, Syria
Borrower: Lafarge Cement Syria
Mandated lead arranger: Bank Audi (bookrunner and original international lender)
Multilateral lenders: EIB; EKF; Proparco;
Other lenders: Arab Bank-Syria; Bank Audi Syria; Byblos Bank; The Housing Bank for Trade & Finance; IBL Bank; BLOM Bank; The International Bank for Trade & Finance; Bank of Syria & Overseas; Fransabank Syria; Banque Bemo Saudi Fransi; Bank Al-Sharq; Banque Libano-Française; Bank of Beirut & Arab Countries; Bank of Jordan Syria; Bank of Syria & Overseas
Sponsor legal counsel: Lovells; Sayed & Sayed (Syria)
Lender legal counsel: Shearman & Sterling; Hakim (Syria)
Bank Audi legal counsel: Ramzi Joreige & Partners
EPC: FL Smidth