The Red Sea Development Company (TRSDC), the developer behind the world’s most ambitious regenerative tourism project in Saudi Arabia, has closed a SR14.120 billion ($3.76 billion) term loan facility and revolving credit facility with four Saudi banks.
The financing is the first Riyal-denominated credit facility to receive green financing accreditation, said a statement from TRSDC.
The Green Financing accreditation is governed by a Green Financing Framework aligned with the Green Bond Principles (2018) and Green Loan Principles (2020) set out by the International Capital Markets Association (ICMA) and the Loan Market Association’s (LMA) respectively.
The framework enables TRSDC to issue green loans and other green financial instruments and allows it to identify, select, manage and report on eligible projects and assets in line with principles.
DNV provided an independent, Second Party Opinion on TRSDC’s Green Finance Framework, confirming its alignment with these internationally recognized principles.
Leading Saudi lenders - Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank - acted as mandated lead arrangers. HSBC served as Green Loan Coordinator on the transaction.
Green financing accreditation was awarded due to TRSDC’s market leading approach to social and environmental sustainability and the Red Sea Project’s international recognition as a green project.
"The scale of this project is unmatched anywhere in the world and we are setting new standards in regenerative tourism at every turn," remarked John Pagano, CEO of TRSDC.
"By applying a unique approach to design, utilizing more sustainable methods of construction and using groundbreaking technology, we are not only reducing our impact on the environment but helping to deliver on our commitment to achieve a 30 percent net conservation benefit by 2040. It is this pioneering approach that has helped us secure the first ever Riyal-denominated Green Finance credit facility," he stated.
Chief Financial Officer Jay Rosen said: "This is another milestone for the Red Sea Project and Vision 2030, and we are pleased to have secured our debt financing and capital commitment for our initial phase. This financing adds another level of credibility by having the banks support the project. With a fully secured capital structure our project will become more attractive to investors."
"Through this credit facility, the four participating banks are demonstrating their Environmental, Social and Governance (ESG) credentials, while TRSDC is able to establish itself as a world-leader in sustainable development," he added.
The Red Sea Project has already passed significant milestones and work is on track to welcome the first guests by the end of 2022, when the international airport and the first hotels will open. Phase one, which includes 16 hotels in total, will complete in 2023.
Upon completion in 2030, The Red Sea Project will comprise 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The destination will also include luxury marinas, golf courses, entertainment and leisure facilities.
"We aim to lead the international luxury tourism industry’s transformation into a more sustainable model, including environmental and social sustainability," stated Pagano.
"This Green Finance classification is the latest proof that we are setting new standards in ecotourism and showing the industry that things can be done in a different way both here in the Kingdom, and globally," he added.
