Phosphate unit's debt rescheduling to boost cash flows, says Maaden CEO

Debt restructuring and refinancing of Saudi Arabian Mining Co.'s (Maaden) phosphate unit will boost cash flows amid the current market conditions, chief executive officer Mosaed Al-Ohali told CNBC Arabia reported.

“Loans interest rate is very favorable, and the new financing will help improve our cash flows at a time in the market where cash is very tight,” he said.

The refinancing allows the phosphate business to reduce interest expense and pushes back repayments until 2022.

"We capitalized on favorable interest rates; the loan was secured to finance the project and was converted into commercial assets post go-live phase,”, he added.

The project is subject to a production ramp-up to reach the design capacity. Construction works were completed in 2017, while commercial operations were launched in 2018, he noted.

Lifting curfew in the Kingdom and resuming all economic activities will boost demand and support economic recovery, Al-Ohali stated.

Maaden is seeking to maintain production at maximum capacity, cut operating expenses and expand its supply chain to clients and global markets including India, Africa and South America.

Maaden's Waad Al Shamal Phosphate Co. signed an accord with a group of lenders to refinance and reschedule $4.1 billion in debt as it sought to trim interest costs amid a collapse in commodity prices. It will refinance $2.3 billion owed to a syndicate of commercial banks and financial institutions and will also reschedule $1.8 billion of debt owed to Saudi Arabia’s Public Investment Fund and transfer it to the Public Pension Agency. Saudi Arabian Mining Company (Maaden) announced earlier today that that its subsidiary, Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC) signed two agreements on June 20 to reschedule and refinance its debts.

The first agreement includes rescheduling the company’s debts owed to the Public Investment Fund (PIF) and transferring it to the Public Pension Agency. Meanwhile, the second entails refinancing debts owed to a syndicate of commercial banks and other financial institutions by using the proceeds from new debts provided by a group of commercial banks.