(Yicai Global) May 10 -- Shares in Zibo Qixiang Tengda Chemical shot up by the exchange imposed daily limit today after the Chinese rubber and other chemical products maker said it has obtained a 10-year credit line worth EUR86.5 million (USD105 million) from DZ Bank to help build its propylene oxide factory.

Qixiang Tengda’s stock price [SHE:002408] closed up 9.59 percent at CNY11.20 (USD1.75) today. Earlier in the day it had reached CNY11.24.

The loan from Frankfurt-based DZ Bank, Germany’s second largest lender by asset size, will be at an interest rate 0.75 percent higher than the six-month Euro Interbank Offered Rate, Qixiang Tengda said yesterday. Should the Euribor rate turn negative, the interest rate will be zero, it added.

The Zibo, northeastern Shandong province-based firm is planning to use German technology provided by Evonik Degussa and ThyssenKrupp Industrial Solutions at the facility.

Euler Hermes, a German trade credit insurance agency, will provide 95 percent guarantee for the loan. The equipment will be imported from Germany and used as collateral, the company said.

The funds will used to help build the factory, purchase the equipment and pay the financing fees. Obtaining the credit line will help optimize Qixiang Tengda’s financing structure and enhance the company’s reputation and brand image abroad, it added.

The construction of the facility, capable of producing 300,000 tons of the chemical a year, will take two years, it said. In September 2019, Qixiang Tengda withdrew from an original agreement to build the plant with South Korea’s SKC, but gave no reasons for its decision to go it alone.

The new factory will link the company’s upstream and downstream companies to give Qixiang Tengda a complete industrial chain in the propane dehydrogenation sector, it said. This will give the firm more control over production costs and profitability, and allow it to expand its product range to include chemicals with three carbon atoms rather than only those with four.

Editor: Kim Taylor