Overseas Chinese Banking Corp. is putting together a M$143 million Islamic ABS for Rimbunan Hijau, a conglomerate with interests in logging, plantations and shipping.
The company is following the trend set by domestic competitors Multi-Vest Resources and Boustead Holdings, both of which recently announced plans to issue deals backed by plantation assets (see ASR 3/28/05)
Under the terms of the latest offering, two Rimbunan Hijau subsidiaries will transfer ownership of two oil palm plantations and an oil palm mill to the Midas Plantation SPV. The subsidiaries will lease back those assets for the term of the deal with a buyback option at maturity. The current loan-to-value of the assets is 69.1%.
The transaction is structured in two parts: the SPV will issue M$93 million of conventional Sukuk Al-Ijarah paper - leasing notes - and an additional M$50 million of ABCP. The ABS component features eight tranches with RAM ratings ranging from AAA to A3 and maturities going from 4.5-years to 9.5-years, while up to M$50 million of ABCP will be issued at various stages over the first seven years of the deal.
Working on forecasted M$24 million annual cashflows, the issuer should comfortably meet its obligations. In a worst-case scenario, a M$50 million put option was structured into the transaction, whereby Overseas Chinese Banking Corp. will purchase all the notes from investors ahead of scheduled maturity.
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