Sime’s sukuk plan gets okay, crucial step to carve 3 listed companies

Malaysian Sime Darby, Japan's Mitsubishi Corporation, Tokyu Land and Hong Kong Land have also signed deals in Jakarta and surrounding areas.

PETALING JAYA: Sime Darby Bhd has received approval from its bondholders to restructure US$800mil (RM3.46bil) worth of sukuk, which is a crucial step in its plan to carve out three independent listed companies.

Holders of the sukuk, of which US$400mil will mature in 2018 with an equal amount maturing in 2023, approved the company’s plan to buy back the papers or replace the obligor or borrower to Sime Darby Plantation Sdn Bhd from Sime Darby currently.

“This is an important step for the group in our proposed reorganisation exercise to unlock value for shareholders. We must ensure that each listed company has the optimal capital structure, which will allow it to pursue growth with focus and agility,” said Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh in a statement yesterday.

The broader reorganisation of the group involves the proposed listing of Sime Darby Plantation and Sime Darby Property through share distributions. Sime Darby will remain listed, owning the automotive, industrial equipment and logistics businesses.

On April 18, Sime Darby launched a debt-restructuring exercise to restructure its US dollar-denominated sukuk.

Under the exercise, sukuk holders can cash in on their investments in the sukuk, or agree to change certain terms and conditions and replace Sime Darby with Sime Darby Plantation as the new borrower or obligor.

Sime Darby achieved a final tender and consent participation of 91% across both series of sukuk. In addition, investors holding almost a quarter of the 2023 sukuk chose to remain invested in Sime Darby Plantation.

Sime Darby Plantation achieved first-time corporate ratings of Baa1 and BBB+ by Moody’s Investor Service and Fitch Ratings Ltd, respectively, both on a stable outlook. The ratings are similar to Sime Darby’s existing corporate ratings and reflect Sime Darby Plantation’s position as one of the world’s leading oil palm plantation players, its size and scale of business, track record and strong shareholders’ support.

HSBC acted as the sole structuring and dealer manager for the exercise.

CIMB Research analyst Ivy Ng believes it would be neutral as the exercise was just to facilitate the listing. “There should be no significant impact and the company plans to transfer the debt from the holding company to the individual unit,” she told StarBiz.

Sime Darby has announced its plan to create three standalone businesses: plantation, property and trading, and logistics.

Plantation and property would be listed on Bursa Malaysia, while trading and logistics would remain under Sime Darby.

It would have to undertake an internal restructuring of its holding company and its subsidiaries involving restructuring of the borrowings of the group, the transfer of certain assets, including land, within the group and the capitalisation of inter-company loans.

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