PETALING JAYA: The world’s fourth largest cocoa grinder Guan Chong Bhd (GCB) is undertaking a sukuk exercise for its future expansion plans.
It is establishing an Islamic medium term notes programme (sukuk wakalah) of up to RM800mil in nominal value.
“The sukuk wakalah programme will provide us with adequate funds for our working capital and capital expenditure requirements, in support of the ongoing expansion of our international operations, ” Brandon Tay Hoe Lian, managing director and CEO of GCB, said in a press release.
“Proceeds from the first tranche of issuance of RM300mil will go towards funding the ongoing construction of our new cocoa grinding facility in Ivory Coast, which is set to commence operations in the second half of 2021.
The programme will also support our expansion in Europe, following our acquisitions of industrial chocolate provider Schokinag in Germany, and the land and building in United Kingdom, ” Tay added.
The sukuk wakalah has a tenure of 20 years and is assigned a preliminary rating of AA-IS with a stable outlook by Malaysian Rating Corporation (MARC).
After the RM300mil first tranche, the subsequent tranches will to be issued anytime within the 20-year tenure.
“The strong rating from MARC reaffirms the strong fundamentals of GCB’s financial and sustainable business model, ” Tay said.
GCB is currently setting up a 60,000-tonne cocoa grinding facility in Ivory Coast at an estimated cost of RM50mil-60mil, being the first phase of its investments into the world’s largest cocoa beans producing country.
The company said this new facility would increase its annual grinding capacity from 250,000 metric tonnes currently to 310,000.
The new grinding facility will also supply its cocoa ingredient requirements for its Germany operations as well as support its expansion in Europe, it said.
GCB’s gross gearing as at June 30 stood at 0.6 times, consisting of mainly short-term borrowings.
After the first tranche of sukuk wakalah, the company’s gross gearing would increase to 0.8 times, a level that the company says is comfortable.
“GCB’s growth trajectory in the recent past has been mainly powered by capacity expansions in South-East Asia, serving a global clientele.
“Today, we are clearly embarking on establishing our operational presence worldwide to stake a higher claim in the cocoa grinding sector in the future, ” Tay said.