The Egyptian Refining Company (ERC) has achieved financial close on a US$ 3.7 billion package to construct a greenfield petroleum refining upgrade project in the Greater Cairo Area. The ERC project is a public-private partnership with the private sector investing alongside the government to address a critical national requirement for infrastructure.\n\nDeveloped by Citadel Capital (CCAP.CA on the Egyptian Exchange), the leading private equity firm in the Middle East and Africa with US$ 9.5 billion in investments under control, ERC is an import substitution project to address Egypt’s growing demand for products such as diesel that are currently imported in rising quantities.\n\nThe state-of-the-art facility will produce over 4.1 million tons of refined products and high-quality oil derivatives per year, including more than 2.3 million tons of Euro V diesel (the cleanest-burning diesel fuel in the world). ERC will enable Egypt to reduce its current level of diesel imports by approximately 50%.\n\n“ERC is more than one of Africa’s largest-ever project finance deals, it is also a transformative development for the Egyptian economy. The financial close of ERC confirms to international investors and the global community that Egypt is open for business. The signal this sends is huge,” said Citadel Capital Founder and Chairman Ahmed Heikal, adding, “ERC is a key component of Egypt’s energy security going forward.”\n\nERC will deliver diesel and other high-value products to the Egyptian General Petroleum Corporation (EGPC) at the heart of the consumption market in the Greater Cairo Area.\n\n“We would like to thank everyone who has made this project possible, from our equity investors to the providers of ERC’s debt facilities, from the Government of Egypt to the people of Mostorod, where the refinery will be located,” Heikal noted.\n\nFinancing for the project includes US$ 2.6 billion in debt and a further US$ 1.1 billion in equity.\n\nStructure of the Equity Component\n\nERC is supported by US$ 1.1 billion in equity provided by a broad spectrum of investors including EGPC (which has invested US$ 270 million for a 23.8% interest), Qatar Petroleum International (QPI, which has committed over US$ 362 million for an effective 27.9% interest) and Citadel Capital (which has directly and indirectly invested over US$ 155 million and holds an effective equity stake of 11.7%).\n\nOther participants in the funding include investors from Egypt and the Gulf Cooperation Council countries as well as development finance institutions, including the International Finance Corporation (US$ 85 million, 6.4% ownership), the Dutch development bank FMO (US$ 29 million, 2.2% ownership) and Germany’s DEG (US$ 26 million, 2.0% ownership). The InfraMed Fund, the largest investment vehicle dedicated to infrastructure in the Mediterranean area, is also an investor with an effective ownership of 7.5% on an investment of US$ 100 million.\n\nEFG Hermes Investment Banking acted as placement manager for the equity component, raising approximately US$ 462 million of the required equity funding for ERC.\n\n\nStructure of the Debt Component\n\nERC is also backed by a US$ 2.6 billion debt package announced in August 2010 which was arranged by ERC’s financial advisor Société Générale and supported by ERC’s legal advisors, Shearman & Sterling and Arab Legal Consultants.\n\nThe package includes US$ 2.35 billion of senior debt and US$ 225 million of subordinated debt. With the Bank of Tokyo-Mitsubishi serving as the global coordinator, institutions participating in the senior debt package include the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI), the Export-Import Bank of Korea (KEXIM), the European Investment Bank (EIB) and the African Development Bank (AfDB).\n\nMitsui & Co. (which is part the contractor consortium building the refinery) and the African Development Bank are providing the subordinated debt financing.\n\nThe ERC Project\n\nToday, the Cairo Oil Refining Company (CORC) — ERC’s neighbor in the Mostorod district of Greater Cairo — is Egypt’s largest refinery, accounting for some 20% of total national refining capacity. CORC’s first units were installed in 1969 and it has a refining capacity of 160,000 barrels of crude oil per day (BPD).\n\n“Approximately 67% of CORC’s output is fuel oil and this will be purchased by ERC at international prices and used as feedstock to be further refined to produce more than 4.1 million tons of refined products and high-quality oil derivatives per year,” said ERC Chairman Abdelfattah Abu Zeid. “We are proud to be employing the most advanced and environmentally stringent technologies from Conoco Philips / Bechtel, Axens and KTI.”\n\nThe facility’s entire liquid fuels production will be sold to the state-owned EGPC under a 25-year offtake agreement at international prices.\n\nBenefits to Egypt and the Local Communities\n\nEGPC estimates that in addition to decreasing the country’s subsidies bill for imported fuel, ERC will result in more than US$ 300 million in direct annual benefits through avoided transportation and insurance costs, the elimination of product shipment losses, and revenues generated from storage and processing fees.\n\nERC will use proven, latest-generation technologies to meet the environmental standards of the International Finance Corporation (World Bank) and the European Union, as well as Egyptian environmental laws, to ensure that operations do not result in any form of environmental degradation.\n\nERC’s refining process will, in fact, result in substantial environmental benefits to Egypt by annually preventing the release of 186,000 tons of SO2 (sulfur dioxide) that are currently emitted into the atmosphere. This represents a 29.1% reduction in Egypt’s present-day SO2 emissions (from the burning of sulfur-containing diesel and fuel-oil) and will result in much-needed improvement in air quality in the Greater Cairo Area.\n\n“We will also deliver a number of projects with positive social impacts on the Mostorod area,” said Abu Zeid. “Our contractors will require 10,000 employees at the peak of construction work. During the operations phase, ERC’s operations and maintenance contractor will create permanent jobs for more than 700 staff. Although activity on the project has not started, more than 500 welders, pipefitters, mechanics and electricians have already received vocational training to prepare people in the nearby communities to obtain jobs.”\n\nERC is being engineered and constructed by GS Engineering & Construction of Korea and Mitsui & Co. of Japan. WorleyParsons is ERC’s project manager and the operations and maintenance of the refinery will be performed by the Egyptian Projects Operation & Maintenance Company (EPROM), an EGPC-affiliated company.\n\nPath Forward\n\n“The ERC Project has been in development for more than five years, during which time it weathered the 2008 global financial crisis, the January 25, 2011 Egyptian Revolution, and now the ongoing Eurozone banking challenges. To keep the lender group and all other stakeholders engaged during this period is a testament to the economic strength of the project, its importance in addressing Egypt’s increasing demand for refined products, and the stakeholders’ long-term commitment to support Egypt’s economic and political development,” said ERC Chief Executive Officer Thomas Thomason.\n\nEngineering is underway and is expected to be completed in late 2013, at which time construction activity will begin at the site. Operations are scheduled to start in 2016.\n\n—Ends—\n\nThe Egyptian Refining Company is building a state-of-the-art US$ 3.7 billion greenfield oil refinery in the Greater Cairo Area, which will produce over 4.1 million tons of refined products per annum, including over 2.3 million tons of EURO V diesel, the cleanest fuel of its type in the world. ERC’s production will be sold to the Egyptian General Petroleum Corporation (EGPC) under a 25-year offtake agreement at international prices.\n\n\nCitadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The firm’s 19 OSFs now control Platform Companies with investments of US$ 9.5 billion in 15 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.2 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2007-2012, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.\n\nFor more information, please contact:\n\nMs. Ghada Hammouda|\nHead of Corporate Communications,\nCitadel Capital (S.A.E.)\n\nghammouda@citadelcapital.com\nTel: +20 2 2791-4440 • Fax: +20 22 791-4448\nMobile: +20 106 662-0002