Sorfert Algerie: Setting the scene

In April 2008 Orascom Construction Industries and Sonatrach secured a 15-year Eu1.1 billion-equivalent ($1.7 billion) locally denominated facility for Sorfert Algerie.

The deal was the first of two major Algerian fertilizer projects closed in 2008, both at Arzew, and set the scene for Sharkia El Djazairia El Omani lil Asmida – a joint venture between Sonatrach (49%) and Suhail Bahwan Group Holding (51%) – which also raised a $2.06 billion-equivalent locally denominated project facility in November from the same bank grouping.

Sorfert Algerie is a 51/49 joint venture between Orascom and Sonatrach respectively. Orascom initiated the project in 2005 with a detailed feasibility study that was presented to Sonatrach. The two sponsors signed the joint venture agreement on 20 March 2007.

The financing backs development of a nitrogen-based fertilizer production project. The complex will consist of an ammonia/granulated urea plant, with a capacity of up to 1.2 million tonnes per year, and a second ammonia plant with a capacity of 0.8 million tonnes per year. The plant is scheduled to start commissioning its first production during the second half of 2010.

Societe Generale advised Orascom on the financing, which was originally intended to include an international tranche that was subsequently dropped in favour local financing led by arranger and agent bank Banque Exterieure d'Algerie. Participant banks in syndication include Banque Nationale d'Algerie, CNEP Banque, Banque de Developement Local, and Credit Populaire d'Algerie.

The deal is backed by a 20-year gas supply agreement between Sonatrach and Sorfert Algerie. At deal signing Sorfert also entered into an engineering, procurement and construction (EPC) contract with Uhde GmbH and OCI Algeria (OCI's wholly owned construction subsidiary) in continuation of the early works agreement signed on 23 June 2007.

Sorfert Algerie
Status: Financial close 14 April 2008
Description: First of two major Algerian fertilizer projects
Sponsors: Orascom Construction Industries; Sonatrach
Debt: Eu1.1 billion
Financial adviser: Societe Generale
Lead arranger: Banque Exterieure d'Algerie
Participants: Bank Nationale d'Algerie; CNEP Banque;
Banque de Development Locale; Credit Populaire d'Algerie
Sponsor legal counsel: White & Case LLP
Lender legal counsel: Reinhart Marville Torre
EPC contractors: Uhde; OCI Algeria