Sipchem hopes to complete sukuk soon

ALKHOBAR: Saudi International Petrochemical Co. (Sipchem) hopes to complete a SR1.8 billion ($480 million) sukuk issue next month, its chief executive told Reuters.
Ahmad Al-Ohali also said the firm would be open to reviving its aborted merger with Sahara Petrochemicals or pursuing another target but only once the kingdom has changed the rules governing mergers and acquisitions, which scuppered the tie-up.
Sipchem, a mid-sized petrochemicals firm whose largest shareholder is the Zamil Group according to Thomson Reuters data, began meeting local investors in Jeddah and Riyadh this week about the sukuk transaction, Al-Ohali said in an interview.
"I think we have positive feedback so far from potential investors," he said of the deal, which is being arranged by Riyad Capital and NCB Capital.
The sukuk will be used to fund current business requirements as well as new opportunities, Al-Ohali said.
Sipchem announced on Thursday in a bourse filing that it would repay the existing Islamic bond on June 15 using cash reserves.
"We believe we will be closing the sukuk in reasonable terms considering the current financial and banking market challenge."
"We hope by early June to conclude the pricing negotiations, book building and the whole transaction," Al-Ohali told Reuters at the company's headquarters in Alkhobar.

MERGERS
Sipchem and Sahara, which also counts the Zamil Group as its largest shareholder, began merger talks in 2013 but, after more than a year of negotiations, the tie-up collapsed as both sides were unable to reconcile the deal under the existing stock market rules.
Successful mergers between two listed firms are extremely rare in Saudi Arabia — there has only been one successful case in recent memory involving food firm Almarai.
"No activities yet on the subject of merger with Sahara. However, if the regulatory policies and environment is suitable for merger opportunity, things can change," he said.
"I am a strong believer in consolidation in our business, especially now and for the next few years."
On May 3, Saudi Arabia announced a string of reforms to its stock market.
Sipchem is also pursuing downstream opportunities in the Kingdom and plans to grow abroad into areas which would give it a competitive advantage, such as with feedstock in the United States or closer access to its customers, according to Al-Ohali.
Gas supplies are short in Saudi Arabia where the world's largest oil exporter has to satisfy demand for both the electricity and industry sectors.
To address that, Sipchem is trying to rationalize or consolidate its businesses to increase efficiency.