Commodity trading giant Olam has secured a US$1.425bn revolving credit facility (RCF), which will refinance existing debt.
There are three tranches on the package: a 364-day RCF of US$570mn, a two-year RCF of US$427.5mn and a three-year RCF of US$427.5mn.
Nine banks joined as senior mandated lead arrangers: ABN Amro, ANZ, First Abu Dhabi Bank, HSBC, National Australia Bank, Natixis, Standard Chartered, UniCredit and SMBC.
A further eight were mandated lead arrangers: Bank of Baroda, BNP Paribas, Commonwealth Bank of Australia, DBS Bank, JP Morgan, Mizuho, MUFG and Westpac.
The company did not respond to requests for information on the terms of the deal.
Olam’s global head of treasury, Jayant Parande, says: “This refinancing was an integral part of our ongoing efforts to proactively manage our capital structure. I would like to thank all the participating banks for their strong support in making this transaction a success.”
The company has been hitting the Asian debt markets with great regularity this year. In September, it closed its second samurai loan facility in Japan, worth ¥30bn (US$265mn). Again, this was for refinancing purposes, with the lead lenders being MUFG, Mizuho and the Development Bank of Japan. The facility was subsequently syndicated into the Japanese market, with 12 banks and institutions joining the ticket.
In April, the Singapore-based trader secured US$163mn in development finance from the Asian Development Bank (ADB) and the Japan International Co-operation Agency (JICA), which was to fund capital expenditure and working capital requirements in Vietnam, Indonesia, Timor-Leste and Papua New Guinea.
The developmental portion is a seven-year tranche for Café Outspan Vietnam Limited (COVL), a local subsidiary of Olam in Vietnam focused on soluble coffee manufacturing, which would support tens of thousands of smallholder farmers in the region.
Also in April, Olam closed a US$650mn RCF with the Singapore branches of ANZ, BBVA, BTMU, BNP Paribas, Commerzbank, Credit Suisse, DBS, HSBC, JP Morgan, Mizuho, NAB, Natixis and Standard Chartered.
Finally, in March, the company secured Asia’s first sustainable club loan, a three-year, US$500mn RCF, the pricing of which will be reduced if it meets certain performance criteria around matters such as carbon intensity, responsible sourcing, and board diversity.
Despite the warm reception it has received from lenders, Olam saw its profit drop by 36.4% in the second quarter of the year. This was largely due to a down cycle in coffee and unprecedented weather conditions, specifically with regard to peanut farming in Argentina.
The company will also be watching closely the machinations of the trade war. As one of the world’s largest traders in soft commodities, it has operations around the world and can expect to have to shift supply routes, as well as suffer slowdowns in procurement, demand and pricing as a result of market volatility. This is largely an indirect impact, due to the ripple effect of China’s sourcing from other markets in Asia, rather than the direct US-China trade route.