Olam secures $7 billion in loans as restructuring plan advances

The facilities comprise a US$1.2 billion three-year term loan and two 18-month bridge loans of US$2 billion each.
The facilities comprise a US$1.2 billion three-year term loan and two 18-month bridge loans of US$2 billion each.PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Agri-business giant Olam International has secured US$5.2 billion (S$7 billion) worth of loans in part to support its business reorganisation plans, the mainboard-listed firm said in a Singapore Exchange filing on Tuesday evening (Aug 31).

The three facilities comprise a US$1.2 billion three-year term loan and two 18-month bridge loans of US$2 billion each.

The term loan facility will be used for general corporate purposes of the Olam group while the bridge loan facilities will be used to facilitate Olam's reorganisation plans.

Olam announced last month a restructuring into three business units to unlock value.

It plans to carve out and list the company’s cocoa, coffee, edible nuts, spices and dairy businesses - Olam Food Ingredients (OFI) - by the first half of next year. Olam’s food, feed and fibre business - Olam Global Agri (OGA) - will also be hived off, with the aim of listing it after OFI goes public.

Once OFI and OGA are spun off, Olam International will focus on investing in start-ups involved in digital technology and sustainability.

Commenting on the latest loan facilities, Olam’s group chief financial officer N. Muthukumar said: “This landmark transaction gives us significant flexibility to allocate financing across our three new operating groups as part of our reorganisation plan. We thank our banking partners for their strong commitment and support.”

The terms of the three loan agreements include provisions that allow Olam to allocate the facilities to OFI, OGA and Olam International operating groups after the spin-off and listing of OFI.

Citibank, JP Morgan Chase Bank, MUFG Bank and HSBC Bank participated as senior mandated lead arrangers for the facilities. HSBC is the facility agent.

Shares of Olam rose four cents, or 2.5 per cent, to $1.64 as of midday on Wednesday, following the announcement.