Olam secures US$150M club loan from DBS and ICBC Singapore

Palm kernels at a plantation in IndonesiaPalm kernels at a plantation in Indonesia

Olam International has secured a US$150 million club loan referencing the USD Secured Overnight Financing Rate (SOFR), with DBS and ICBC’s Singapore branch, the agri-business said in a filing to SGX Tuesday.

A club loan is a syndicated loan where the banks underwrite the full amount of the loan with no intention of reducing their stakes later, and with the club members generally sharing nearly equal parts of the fees.

The facility has a one-year tenor with Olam Treasury as a co-borrower, Olam said.

Proceeds will be used for general corporate purposes, Olam said

The deals terms will allow for the carve-out, separation, and proposed demerger and initial public offering (IPO) of Olam Food Ingredients, or OFI, as per Olam’s re-organisation plan, the filing said.

Olam Food Ingredients, or OFI, was created in early 2020 in a re-organisation of Olam, which plans to spin off the unit in a primary listing on the London Stock Exchange, while concurrently seeking a listing in Singapore, in the first half of 2022.

OFI works with food and beverage brands globally, including manufacturers, retailers and food-service outlets, as well as some niche and premium players.

Olam said the club loan may be one of Singapore’s first referencing SOFR, following on from Singapore’s first club loan pegged to the Singapore Overnight Rate Average (SORA), which the company secured in September 2020 from DBS and ICBC Singapore.

“We are delighted to continue our partnership with DBS and ICBC to explore financing solutions that aid us in the transition to alternative
risk-free benchmark rates ahead of the impending discontinuation of LIBOR,” N Muthukumar, group CFO of Olam, said in the statement.