International law firm Freshfields Bruckhaus Deringer has advised Bahri in relation to a US$848m Shariah-compliant bridge facility arranged by JP Morgan, Samba Financial Group and The Saudi British Bank, for the merger of Vela assets and operations with Bahri.
The transaction involved merging 14 very large crude carriers (VLCCs), a floating storage VLCC, one Aframax tanker and four product tankers which resulted in Bahri becoming the third-largest owner of VLCCs in the world. The overall value of the merger is US$1.3bn with Saudi Aramco owning 20% of Bahri shares. As part of the agreement Bahri, under a long-term shipping contract, also becomes the exclusive carrier of all Saudi Aramco VLCC sized Crude Oil cargos sold on a Delivered Basis.
Commenting on the transaction, Riyadh-based corporate partner Fares Al Hejailan who led the Freshfields team, said: ‘Bahri is one of the most significant companies in its field, in one of the region’s key strategic sectors. We were therefore delighted to support one of Saudi Arabia’s market-leading organisations on such a strategic merger and are very pleased to have been involved in what is considered the largest merger in the history of Saudi Arabia’.
Tarek El-Assra, Head of Islamic Finance at Freshfields, commented: ‘Bahri is well positioned for future growth and opportunities as a result of this transaction which strengthens its position in the Middle East and increases its critical mass in the international shipping sector. The use of Islamic finance to fund strategic merger & acquisitions of this nature is something we are seeing more and more of across the region. Saudi Arabia is naturally one of the biggest markets for Islamic finance and a market where we anticipate more industry specific M&A consolidation and related financing requirements going forward’.
Local Saudi Arabian law advice for the transaction was provided by Freshfields’ associated firm The Law Firm of Salah Al Hejailan.
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