Olam makes its mark in US$250m bond issue

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You may want to look a closer look at Olam if you haven't. Bondholders are not known to be high risk takers and shown lots of confidence in Olam's long-term prospects.
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By SIOW LI SEN


COMMODITY player Olam International yesterday sold US$250 million worth of 7.5 per cent, 10- year bonds - the first unrated Singapore company to do so in international debt markets.

A jubilant banker close to the transaction said that, for international markets, bonds normally have to be rated.

'Many investors in their mandates can't buy unrated paper,' he said.

HSBC and JPMorgan acted as joint lead managers and joint bookrunners for the sale of Olam's US dollar bonds.

For Olam, which counts Temasek Holdings as its second largest shareholder with 14 per cent, this debut in the international debt market has several firsts. It is also the first unrated company in the supply chain industry to tap international markets, and this is its first long-term debt.

'Companies like Noble and Cargill are all rated,' the banker said.

'To be able to access the market as unrated is one thing, but to also be able to borrow for 10 years is another,' he said.

Olam did carry out extensive meetings with investors in Singapore, Hong Kong and London to prepare for its inaugural issue.

Investors were impressed with the strong credit story, its business and its management, he said.

Olam chief executive Sunny George Verghese said the debut bond offering has diversified the group's sources of funding from banks to the capital markets.

Investors were impressed by Olam's unique global position in the world's agricultural industry, he said.

'We are in 20 agricultural commodities and in 64 countries - a footprint that gives us significant edge and competitive advantage,' he said.

Olam was established in 1989 by the Kewalram Chanrai Group (KC Group), which has more than 140 years of trading history.

The KC Group currently owns 22.8 per cent of the total issued share capital of Olam.

Olam's key management team holds about 10.3 per cent, including Mr Verghese's 4.4 per cent.

The company has been on an acquisition spree. Over the past three years, it has made 17 acquisitions which cost about US$1 billion.