Boustead issues RM1.2b sukuk to privatise Al-Hadharah Boustead REIT

Boustead issues RM1.2b sukuk to privatise Al-Hadharah Boustead REIT
Business & Markets 2013
Written by Zatil Husna of theedgemalaysia.com
Wednesday, 18 December 2013 15:52

KUALA LUMPUR (Dec 18): Boustead Holdings Bhd (Boustead) announced its sukuk programme, Junior Islamic medium-term note programme totalling RM1.2 billion in nominal value, part of which would be utilised for the privatisation of its real estate investment trust, Al-Hadharah Boustead REIT (Boustead REIT).

In a statement today, the conglomerate said the privatisation of Boustead REIT was part of the group’s plan to unlock the value of the group’s plantations businesses.

Boustead Holdings’ deputy chairman and managing director, Tan Sri Lodin Wok Kamaruddin said: “The consolidation of our plantation assets under Boustead Plantations Bhd (BPB) is to achieve economies of scale and business synergies in its operations.

“Subsequently, we are looking to further unlock the value of our plantation business via the planned listing of the enlarged BPB in 2014,” he added.

Boustead intends to use total issuance proceeds of RM650.0 million for the privatisation of its REIT division.

The group’s Junior Sukuk Programme entails the issuance of hybrid equity in the form of Perpetual Junior Sukuk, which proceeds shall be utilised in several matters, amongst it are to finance capex, working capital requirements, corporate exercises, refinance existing borrowings of Boustead Holdings and its subsidiary.

The Junior sukuk’s first tranche consist of RM683.0 million issuance of Perpetual Junior sukuk by the end of the year.

“The unitholders and shareholders of Boustead REIT and Boustead respectively had on Dec 5, 2013, approved the privatisation of Boustead REIT which would be undertaken by Boustead Plantations Berhad (BPB), a wholly-owned subsidiary of Boustead.

Boustead Holdings’ finance director, Daniel Ebinesan said: “Further Perpetual Junior Sukuk can be issued under the Junior Sukuk Programme.

“Coupled with the proceeds from the proposed IPO of BPB, the Junior Sukuk Programme would lead to the improvement of the group’s gearing level,” he said.

Ebinesan said the Perpetual Junior sukuk also incorporates the characteristics of equity shall be recognised as part of Boustead’s shareholders’ funds.

“As such, this exercise would allow us to raise funds without impacting our gearing level,” he added.