Olam secures Asia’s first sustainability-linked club loan facility

Deal is Asia’s first sustainability-linked club loan, a facility that links the interest rate on the loan to achieving clear sustainability targets

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SINGAPORE-listed Olam International, an agri-business, on March 26 announced that it has secured a three-year sustainability-linked revolving credit facility aggregating US$500 million. This is Asia’s first sustainability-linked club loan – a facility that links the interest rate on the loan to achieving clear sustainability targets.

Under the facility, Olam has to meet improvement targets for a range of environmental, social and governance (ESG) metrics, as assessed by Sustainalytics, a provider of ESG and corporate governance research and ratings. The metrics are tested on an annual basis and if the pre-set improvement targets are achieved, the interest rate on the facility will be subsequently reduced.

Olam’s co-founder and group CEO, Sunny Verghese, believes the innovative facility will serve as a catalyst in further developing sustainability-linked financing in the region: “This is a good example of how sustainable companies can become more successful and of how we can ‘do good’ and ‘do well’ at the same time,” he adds.

Olam’s wholly-owned subsidiary Olam Treasury Private Limited is a co-borrower to the facility. The company has appointed 15 banks as mandated lead arrangers who will be providing the facility in equal parts: ABN Amro Bank, ANZ, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Commerzbank, Commonwealth Bank of Australia, DBS, HSBC, ING Bank, Mizuho Bank, National Australia Bank, Natixis, Rabobank International, Standard Chartered and UniCredit Bank.

ING Bank is the sustainability coordinator for the facility, while BNP Paribas is the facility agent.

The sustainability-linked facility is similar to what Wilmar International concluded in November last year in which it partnered with ING to convert a portion of its existing bilateral, committed revolving credit facility of US$150 million with the bank into a sustainability performance-linked loan.

Progress will be measured by Sustainalytics and if the performance milestones are met, the interest rate for part of the loan will be reduced for the following year.

Photo: Olam

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Date

27 Mar 2018

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