Lovells advises Lafarge on first project financing to be closed in Syria

The project finance loans amount to $341m, made available in Syrian Pounds and US dollars, and have been provided by an international syndicate of lenders including EIB, Proparco, EKF and Bank Audi S.A.L. Audi Saradar Group.

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

The groundbreaking nature of this matter meant that an innovative structure was required. A three phase structure was adopted for the financing whereby the terms will start on the basis of recourse to the sponsors, and upon the requirements for a new phase being achieved the recourse to sponsors is reduced and then removed. The criteria for moving to a new phase include a combination of construction and performance milestones and the fulfilment of various local law requirements relevant to a project financing.

The Lovells team for the transaction was led by finance partner Paul Oldman and Consultant Nick Tidnam with assistance from Associate Ajoy Bose-Mallick.

Nick Tidnam said:

"This deal represents another example of the high quality work that we are undertaking for clients in the Middle East and reflects on our position as one of the leaders in the international infrastructure projects market. Compliance with local financial and foreign exchange regulations was paramount and we achieved this in the finance structure without compromising the requirements of the sponsors - ensuring an efficient use of capital as well as sponsor support in the initial phases. Overall the deal represents great news for sponsors and banks contemplating project financings in politically risky markets given the recent market conditions imposed by the global credit crisis."

Lovells worked alongside Syrian law firm, Sayed & Sayed and an in-house legal team at Lafarge comprising Mr Abdur Rahim, one of its Senior Legal Counsel in the Middle East based in its Cairo office, and Gilles Vanlerberghe, Legal Counsel to the Corporate & Securities Group at Lafarge in Paris.

The Lenders were advised by a team from Shearman & Sterling in London led by Kenneth MacRitchie and by Hakim Law Firm in Damascus. Bank Audi was additionally advised by Wadhi Cortbaoui at Ramzi Joreige & Partners in Damascus.