Demonstrating its Islamic finance expertise, Linklaters recently advised on the issuance of 3.749 billion riyals (about $1 billion) worth of sukuk, or Islamic bond certificates, by Arabian Aramco Total Services Company (AATSC) in a transaction that represents the first-ever Sharia-compliant greenfield project sukuk.

Acting as international legal counsel, Linklaters advised Deutsche Securities Saudi Arabia, Samba Capital & Investment Management Co and Saudi Fransi Capital as joint lead managers and joint bookrunners on the issuance of the sukuk certificates, which are part of the wider financing for a $14 billion, 400,000-barrel-per-day refinery and petrochemical project at the Jubail Industrial City in Saudi Arabia.

The law firm had previously advised the diverse lender group on the existing project financing documentation, signed in 2010, which provides for about $8.5 billion of senior debt to be raised by Saudi Aramco Total Petrochemical and Refining Company (SATORP).

“This is a very significant transaction for the capital markets in Saudi Arabia and the wider region and marks an important step forward in the evolution of the onshore ‘debt’ capital markets in Saudi Arabia and, more generally, the diversity of potential funding sources available to major infrastructure projects,” said partner Richard O'Callaghan, who led the team. “We also hope that it will encourage other unlisted companies in the kingdom to access the local capital markets.”

Linklaters noted that key challenge it faced on the transaction was to integrate the innovative and complex Sharia sukuk structure into multi-source conventional financing arrangements and negotiating (and meeting) a stringent set of sukuk accession criteria to preserve the pari passu position of the senior debt. The firm was also instrumental in obtaining a Sharia pronouncement (fatwa) for the sukuk transaction by two leading Islamic financial institutions in Saudi Arabia, Al Inma Investment Company and Bank AlBilad.

Also advising were Allen & Overy (acting as international legal counsel to AATSC, SATORP and the sponsors) and its Saudi partner Abdulaziz AlGasim Law Firm (as local legal counsel to AATSC, SATORP and the sponsors).ALB