Global rubber supplier Halcyon Agri Corporation has bolstered its plantation operations in Asia and Africa, after striking a sustainability-linked loan deal with Deutsche Bank.
Deutsche Bank will provide US$25mn to Halcyon subsidiary, Corrie MacColl, as part of the three-year facility, which can be upsized to US$75mn through the agreement’s accordion feature.
Proceeds of the loan will be used for the maintenance of Halcyon’s rubber plantations in Cameroon and Malaysia, while also promoting its Cameroon Outgrower Programme.
Launched in July 2019, the programme aims to boost the income of 13,000 local smallholder farmers by converting 27,000 hectares of degraded and fallow land into multi-crop farms around a core of rubber.
With Halcyon’s new loan from Deutsche Bank, lending rates are attached to the company meeting certain mutually agreed sustainability performance targets outlined in a framework developed by consulting firm Environmental Resources Management (ERM).
ERM will verify Halcyon’s compliance with the agreement, and will review the loan’s key performance indicators (KPIs).
Deutsche Bank notes in a statement that “while ESG [environmental, social and corporate governance] conditions attached to loan rates are not unusual in corporate lending facilities, it is the comprehensive nature of the KPIs that will set a new standard for the rubber industry, making this commercial loan unique”.
In February, Deutsche Bank was part of a syndicate of more than 20 banks that provided a sustainability-linked US$5bn revolving credit facility (RCF) to Maersk, the world’s largest shipping company.
In that deal, which saw Deutsche Bank acting as one of the mandated lead arrangers, the agreement stipulated that the credit margin under the facility would be adjusted based on the company’s progress in meeting CO2 targets.