Food processing company Wilmar secures US$200m financing to drive agricultural sustainability

image courtesy: Eco Business

SINGAPORE – The United Overseas Bank (UOB), a Singaporean multinational banking organisation, has extended a US$200 million sustainability-linked loan to Wilmar International Limited, Asia’s leading food processing and investment holding company, to advance its agribusiness sustainability agenda.

Both UOB and Wilmar created a list of performance indicators to structure the loan, including corporate governance, carbon emissions, land use and biodiversity, community relations and supply chain practices.

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The set indicators will help ensure Wilmar’s operations are socially and environmentally responsible, as the company furthers its commitment to meeting the global demand for food without causing a drain on resources.

This is especially important given that the global population is expected to increase to close to 10 billion by 2050.

The interest rate on the loan will be pegged to Wilmar’s achievement of the pre-determined targets that have been set based on the list of performance indicators.

“We are very pleased to have UOB’s support with this sustainability-linked loan which aligns our sustainability and corporate financing strategies. It is important to Wilmar that we continue to improver our ESG performance as the business grows.”

Charles Loo – Chief Financial Officer of Wilmar.

Sustainalytics, a global independent provider of environmental, social and governance (ESG) research and ratings will conduct the assessment of whether Wilmar has achieved those targets on an annual basis.

“In building a responsible business, Wilmar believes that the pursuit of our sustainability goals must encompass all aspects of our operations including seeking sustainable financing solutions at the corporate level,” said Charles Loo, Chief Financial Officer of Wilmar.

“We are very pleased to have UOB’s support with this sustainability-linked loan which aligns our sustainability and corporate financing strategies. It is important to Wilmar that we continue to improver our ESG performance as the business grows.”

Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, manufacturing of consumer products, specialty fats, oleochemicals, biodiesel and fertilizers as well as rice and flour milling.

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At the core of Wilmar’s strategy is an integrated agribusiness model that encompasses the entire value chain of the agricultural commodity business, from cultivation, processing, merchandising to manufacturing of a wide range of branded agricultural products.

It has more than 500 manufacturing plants and a distribution network covering China, India, Indonesia and some 50 other countries. The group has a multinational workforce of about 90,000 people.

Ms Lim Chen Chen, Head of Group Structured Trade and Commodity Finance, UOB, said, “At UOB, we are committed to supporting clients in their ESG efforts through our deep sector knowledge and suite of sustainable financing solutions.

“Through our sustainability-linked loan to Wilmar, we are able to help them in their efforts to improve the sustainability of their operations and to meet the present needs of society without compromising the ability for future generations to enjoy the resources we have today.”

Wilmar inks first agribusiness loan pegged to Sora

Wilmar recently inked the agribusiness industry’s first corporate loan agreement pegged to the Singapore Overnight Rate Average (SORA) with DBS.

At the start of each interest period, Wilmar will also have the option to enter into a SORA interest rate swap (IRS) to give certainty of interest rates. This is the industry’s first SORA loan coupled with an IRS.

The SGD200million (US$145m) SORA-based loan and the IRS will be yet another milestone in the nation’s transition roadmap towards adopting SORA as the new interest rate benchmark for the Singapore Dollar cash and derivatives markets.

Given SORA’s growing importance as a key interest rate benchmark in SGD financial markets, it supports the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee (ABS-SFEMC)’s efforts to develop new SORA based markets.

Wilmar reported a 50% improvement in net profit to US$610.9 million for the six months ended June 30, 2020, on the back of improved contributions across all core segments.

Excluding losses from non-operating items, core net profit for 1H2020 improved 49% to US$635.9 million from US$427.1 million of the corresponding period in 2019.

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