SINGAPORE – Olam International, through its wholly owned subsidiary, Olam Treasury Pte Ltd (“OTPL”) has secured a US$350 million three-year credit facility to support efforts towards achieving digital transformation.
Said to be the world’s first digital loan, the facility is linked to Olam’s digital maturity score based on four digital building blocks that is, business strategy driven by digital; digitising the core; new digital growth and enablers.
Olam and the participating banks have agreed on annual improvement targets over the course of the Facility which, if achieved, would trigger a reduction in the interest rate.
According to the company, proceeds from the Facility will be applied towards refinancing of existing loans of Olam and its subsidiaries.
“We are delighted to be a part of this pioneering effort along with our banking partners, to launch this first-of-a-kind facility that links the interest rate on the loan to achieving measurable annual digital improvement targets,” said Olam’s Executive Director and Group Chief Operating Officer, A Shekhar.
“This financing can be a good template to drive the agriculture sector’s digital transformation and is another example of Olam’s commitment towards our purpose of Re-imagining Global Agriculture and Food Systems.”
Seven banks are participating in equal parts in what Olam says is the world’s first-ever digital-linked financing.
Such green loans are granted to firms that are committed to digital transformation targets to drive sustainable growth across its finances and operations.
In March last year, the agri-commodities firm signed a similar three-year US$500 million sustainability-linked revolving credit facility (RCF).
“We believe that companies that undertake a digital transformation will be the winners in their sector in the long term; Digitisation translates into greater competitiveness and profitability, which will allow these companies to stay ahead of the competition,” said Ricardo Laiseca, BBVA’s Head of Global Finance.
In January, Olam unveiled six-year strategy with plans to release US$1.6 billion cash from divesting some of its businesses including sugar, rubber, wood products and fertilizer.
As part of the strategic review, the company said it is planning to invest US$3.5 billion in a six-year period running from 2019-2024 in twelve prioritised high potential growth businesses.
The new strategic plan looks to drive margin improvement by enhancing cost and capital efficiency as well as generating additional revenue streams by offering differentiated products/services.