Olam secures US$200m financing from EBRD partly to offset due loans

SINGAPORE – The European Bank for Reconstruction and Development (EBRD) Technical Cooperation Fund – TaiwanBusiness and the European Union are planning to provide donor support to Olam International Limited, for the development of new methodologies and processes for climate-related risk management and stress testing in Turkey and Egypt.

According to the company, this work will be valuable in helping it to implement the recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD) which can then be shared across the agrisector in both countries.

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Natalya Zhukova, EBRD Director Agribusiness said, “Our region has enormous potential in agribusiness and Olam plays an important role in enhancing its integration into the global trade.

“As part of this project, a significant number of farmers will be added to Olam’s supply chain, improving the quality of products and operational standards.

“We are also pleased to support the company in enhancing its corporate governance for effective climate action.”

The global food and agri-business company and its wholly owned subsidiary, Olam Treasury, have also secured a dual tranche financing facility aggregating US$200 million from the European Bank for Reconstruction and Development (EBRD).

The facility having an average tenor of approximately 3.58 years consists of two tranches i.e. a US$50 million tranche and a US$150 million tranche which will replace Olam’s existing US$150 million loan from the EBRD that is due in December 2020.

Also the loan facility will be utilized to finance purchases of agricultural commodities such as hazelnuts, dry dairy products, grain and onions in selected countries of operation.

Local subsidiaries of the company will take on the processing, storage and distribution of these goods.

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N Muthukumar, Managing Director and Group CFO of Olam, said, “I am delighted to announce the completion of this facility that supports working capital requirements across Olam’s businesses in eastern Mediterranean, Eastern Europe and the Black Sea regions.

“I would like to thank the EBRD for their continuing support and commitment to Olam.”

The announcement came days after the agribusiness company revealed that it has priced a benchmark S$400 million issuance of senior notes due February 2026 under its US$5 billion Euro Medium Term Note Programme.

The Notes were issued at par and priced at a fixed coupon of 4.00% following an intraday book-building exercise.

This issuance marks Olam’s first return to the public capital markets since 2017.

“The issuance tenor of 5 years and 6 months helped extend our debt maturity into 2026, while still pricing within our secondary trading levels. The issue was well subscribed on the back of strong investor demand and is Olam’s lowest ever coupon for a S$ benchmark size transaction,” said N Muthukumar.

The joint lead managers for the transaction were Australia and New Zealand Banking Group Limited, Credit Suisse (Singapore) Limited, DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch and Standard Chartered Bank (Singapore) Limited.

Proceeds from the issuance will be used by Olam for debt refinancing and general corporate purposes.

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