Olam Agri, a subsidiary of agribusinesses and commodities giant Olam Group, has secured an AED2.74bn (US$745mn) financing facility from a group of banks in the United Arab Emirates.
The facility is intended to support Olam Agri’s “increasing activity in the Gulf Cooperation Council region” while diversifying its funding mix, says chief executive of operations N Muthukumar, who is also CFO of Olam Group.
Proceeds will be applied towards refinancing Olam Agri’s existing loans for general corporate purposes, the company adds.
Abu Dhabi Commercial Bank, First Abu Dhabi Bank (FAB) and Standard Chartered are senior mandated lead arrangers for the facility, with Emirates NBD Bank as mandated lead arranger. FAB is also the facility agent.
The deal reflects a major structural overhaul underway at Olam Group. The reshuffle, which was devised after a strategic review in 2019, is in part backed by a package of loan facilities totalling US$5.2bn agreed in September last year.
As part of those efforts, Olam’s grains, animal feed, edible oils, rice, cotton and commodity finance business would be moved to Olam Agri, a wholly owned subsidiary that targets high-growth Asian and African countries.
Meanwhile, the group’s cocoa, coffee, edible nuts, spices and dairy business would be spun off into a separate entity, Olam Food Ingredients (OFI). OFI had intended to list publicly in March this year, but its initial public offering was delayed due to challenging market conditions.
The United Arab Emirates dirham-backed facility is guaranteed by Olam Group. Two Olam Agri subsidiaries are listed as co-borrowers, with a tenor of two and a half years.