Nestle (M) Bhd's wholly-owned subsidiary Nestle Foods (M) Sdn Bhd has signed an agreement for the issuance of RM700mil worth of Islamic commercial paper and medium-term notes (CP/MTN) following approval by the Securities Commission.
This is the first-ever initiative by Nestle Foods to issue Islamic private debt securities. The seven-year programme, guaranteed by Nestle Malaysia, will be utilised to replace the existing RM300mil CP/MTN issued in 2000, as well as refinance other short-term banking facilities.
Nestle Malaysia managing director Jose Lopez told a press conference after the signing ceremony in Petaling Jaya yesterday that the first tranche was for the roll-over of the existing RM300mil CP/MTN and this would be gradually increased to RM550mil, which was to replace the total bank facilities outstanding.
The issuance of RM700mil of CP/MTN is more than what is required by the company. However, we expect the need for financing to increase as the company grows, he said.
Lopez added that the company was taking into consideration its long-term growth and commitment to the country.
He said the programme would allow the company to utilise an alternative and more cost-effective source of funding from the local capital market.
The CP/MTN issue will also be used to finance working capital and maintain, upgrade and replace plant machinery to optimise output and maintain the high quality of food production.
For the past few years, the company has been increasing its production capacity for products like Milo and infant cereals to supply to the rest of Asia. Our capital expenditure is about RM100mil per year, Lopez said.
He said that being one of the leading companies in Malaysia, Nestle Malaysia's performance was expected to move in tandem with the country's growth in gross domestic product.
On the threat of war in Iraq and its impact on the company, Lopez said Nestle Malaysia was well-positioned to face the volatility of war as the company had the flexibility in terms of its systems and people to respond better than its competitors.
We are very optimistic about 2003 as we started the year with very strong market share and good market presence especially for the ice-cream category, he said.
The Al-Murabahah commercial papers/medium term notes have been given a long- and short-term rating of AAA and P1 by Rating Agency Malaysia Bhd.
The joint arrangers for the programme are Citibank Bhd and Aseambankers (M) Bhd, with Mayban Trustee Bhd and Malayan Banking Bhd serving as trustee and syariah adviser respectively.
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