- IOI Corporation Bhd has proposed to establish a Euro
Medium Term Note (EMTN) Programme with an initial programme size of US$1.5bil
(RM4.6bil).
- IOI intends to use the net proceeds from the EMTN
Programme to fund capital expenditure, investments/acquisitions, working
capital and repayment of existing borrowings.
- Notes issued under the EMTN Programme may be listed on the
Singapore Exchange Securities Trading Ltd. The joint lead arrangers and dealers
of the EMTN Programme are HSBC, Mitsubishi UFJ Securities International,
Citigroup and Morgan Stanley.
- The maturity and interest rate of the EMTN Programme have
not been fixed yet.
- The size of IOI’s proposed EMTN is large. In the past, IOI
had issued three tranches of exchangeable bond issues amounting between
US$310mil to US$600mil each. IOI had also carried out a 1-for-15 rights issue
in 2009, which raised proceeds of RM1.2bil.
- We believe that IOI would be using part of the EMTN
proceeds to redeem its US$600mil (RM1.8bil) exchangeable bond issue, which is
due on 15 January 2013. The exchangeable bond is out-of-money as the exercise
price is RM10.73/share.
- We also reckon that IOI would be using some of the EMTN
proceeds to develop its property projects in Singapore. Early this year, IOI
paid S$408mil (RM988.4mil) for a parcel of land near the Clementi Mass Rapid
Transit Station.
- Also, IOI’s share of the development cost of South Beach
property project is estimated at S$1bil (RM2.4bil). The South Beach project is
targeted for completion in 2015F.
- There is a possibility that IOI may be looking to expand
its plantation landbank. Since the cancellation of the acquisition of 11,978ha
of oil palm estates in Sabah from Dutaland Bhd for RM830mil cash, IOI has not
announced any purchase of plantation landbank.
- IOI remains a BUY for the turnaround in the growth of its
palm oil production. For the first time in three years, the group’s FFB output
is envisaged to expand 5%-8% in FY12F.
Source: AmeSecurities
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