TOKYO (Reuters) - Japan's Sumitomo Chemical (T:4005) and Saudi Aramco (SE:2222) will lend $2 billion to their refinery and petrochemicals joint venture as it faces a shortfall of capital due to the COVID-19 pandemic and periodic maintenance, Sumitomo said on Thursday
Sumitomo Chemical plans to provide $750 million, or 37.5% of the loan, to Rabigh Refining and Petrochemical Company (Petro Rabigh) (SE:2380) while Saudi Aramco will lend the rest, a spokesman at the Japanese chemical company said.
Sumitomo Chemical will use funds it raised by issuing hybrid bonds last year for its share and the loan will be provided soon, the spokesman said.
The Japanese company also said the financial completion guarantees it and Saudi Aramco provided for financing the Rabigh Phase 2 refinery and petrochemicals complex project had been terminated as of Sept. 30.
In 2015, Petro Rabigh signed project financing agreements with a syndicate of banks to receive an aggregate loan of $5.2 billion to cover 60% of the cost of the project in Saudi Arabia.
The parent companies each offered financial completion guarantees for 50% of the loan at the time, but they have been lifted as they have fulfilled the requirements for continuous performance and debt-repayment ability, Sumitomo said.
Petro Rabigh started the scheduled repayment of the debt in June 2019 and will continue to repay the balance of the loan out of cash flow generated from its operations, Sumitomo said in a statement.