Golden Agri debuts RM1.5b sukuk notes

The sukuk notes have 5 years in tenor.

According to an SGX release, Golden Agri‐Resources Ltd, through its wholly‐owned subsidiary, Golden Assets International Finance Limited, has successfully completed its inaugural issuance of Ringgit Malaysia 1.5 billion Islamic medium term notes pursuant to its 15‐year Ringgit Malaysia‐denominated IMTN programme of up to Ringgit Malaysia 5.0 billion.

GAR, a company listed on the Singapore Exchange Securities Trading Limited, is the largest Indonesian oil palm plantation group and the second largest globally in terms of planted acreage.

The IMTNs issued have a tenor of five (5) years and will mature in November 2017. The IMTNs were successfully priced on a “bought deal” basis bearing a profit rate of 4.35% per annum, payable semi‐annually in arrears. Capitalising on the Company’s USD‐denominated revenues, Golden Assets also entered into a Cross Currency Swap transaction of the IMTNs into USD.

The net proceeds raised from the IMTNs will be utilised for the Company’s general corporate purposes which are in compliance with Shariah principles.

The Company considers Malaysia the ideal location for the issue of its sukuk given the country’s well established and advanced sukuk market with abundant liquidity, coupled with its familiarity with the palm oil industry in general.

OSK Investment Bank Berhad and RHB Investment Bank Berhad acted as the Joint Principal Advisers / Joint Lead Arrangers for the Programme and the Joint Lead Managers / Joint Underwriters and Primary Subscribers for the IMTNs.

Mr Franky O. Widjaja, the Company’s Chairman and Chief Executive Officer, commented on this sukuk issuance: “We are pleased to see the successful landmark issuance of the maiden sukuk by Golden Assets. We believe that the sukuk will support GAR’s strategy by strengthening its balance sheet, extending the overall debt maturity profile, maximising financial flexibility, and enhancing GAR’s position to execute internal and external growth plans. This issuance also reflects the confidence of the financial market towards GAR’s credit profile.”

Mike Chan, Officer In Charge of RHB Investment Bank, notes that this is yet another significant milestone achievement by the RHB Banking Group leveraging on the synergies of the combined strength of RHB Investment Bank and OSK Investment Bank, and said, “We are deeply honored by Golden Agri‐Resources Ltd’s confidence in RHB Investment Bank and OSK Investment Bank in successfully advising on this landmark transaction.”

“This is an excellent sukuk debut for Golden Assets and further strengthens Malaysia’s leading position in the global sukuk market,” added Haji Abdul Rani Lebai Jaafar, Managing Director of RHB Islamic Bank Berhad.

“The successful sukuk issuance by GAR is a testament of the breadth and depth of our Malaysian debt capital market which is supported by ample liquidity. Corporations around the region are recognising Malaysia as a suitable destination for fund‐raising and this bodes well for the industry as we expect the demand for quality regional corporate debt papers to increase,” said Mr U Chen Hock, Chief Executive Officer of OSK Investment Bank.

This is GAR’s maiden sukuk issuance in Malaysia and has been accorded a long‐term rating of AA2(s) with a stable outlook by RAM Rating Services Berhad.

In addition to GAR’s position as the largest oil palm plantation group with integrated operations in Indonesia and the second largest globally, GAR’s credit profile is well supported by its strong operational and financial position which is reflected in its high production yield parameter and its low gearing ratio.