Friday Sep 20, 2024
Friday Sep 20, 2024
Friday, 19 February 2021 00:18 - - {{hitsCtrl.values.hits}}
LOLC Holdings PLC has concluded the largest non-bank listed debenture issue worth Rs. 10 billion.
LOLC issued 75 million listed rated senior unsecured redeemable debentures at Rs. 100 each with an option to offer a further 25 million debentures in the event of oversubscription of the initial amount.
LOLC said that it received applications for over Rs. 10 billion and the issue was closed yesterday.
The original plan was to raise Rs. 6.5 billion but LOLC increased it to Rs. 10 billion
NDB Investment Bank acted as the Managers to the Issue and Joint Placement Agents. The other placement agent was People’s Bank Investment Banking Unit.
The issue entailed three types of debentures. Type A five year debenture carrying 10.25% per annum payable annually (AER 10.25%); Type B 5 year debenture with 9.85% per annum payable quarterly (AER 10.22%) and Type C 10 year debenture offering 12% per annum payable annually (AER 12%). The issue was rated SLA stable by ICRA Ltd.
The funds generated from the Debenture Issue are to be utilised for refinancing of short term debt facilities as well as to strengthen the company’s short-term maturity buckets.
The proceeds of up to Rs. 7.5 billion raised from the initial issue of debentures will be utilised by the company to re-finance an equal amount of short term/money market borrowings obtained from the commercial banks in the country.
LOLC intends to replace short term debt with medium term debt at fixed interest rates in order to mitigate interest rate risk due to market volatilities. By settling these short term loans and refinancing the same via medium term funds will enable the company to minimise the reliance on financial institutions for the financing of the working capital requirements.
The gearing ratio of the company prior to the issue is 1.66. This is expected to remain unchanged following the debenture issue.
Outstanding short-term loans and overdrafts as at 30 September 2020 amounts to Rs. 31.45 billion of which Rs. 7.5 billion will be settled through the funds raised via the initial issue of the debentures.
Accordingly, outstanding short term loans and overdrafts post debenture issue will be Rs. 31.44 billion.
The company intends to utilise the funds raised through the oversubscription option of Rs. 2.5 billion to settle short term loans and bank overdrafts to the value of Rs. 2,500 million from the remaining pool of over Rs. 31.44 billion outstanding short-term loans.
The specific short-term loans to be settled through the proceeds from the oversubscription option will be selected based on the interest rates of these facilities at the time of settlement. These loans can be settled at any time at the discretion of the company without any penalty charges.
