AEON Credit Service has issued a seven-year bank-backed conventional and Islamic commercial paper/medium-term note (CP/MTN) valued at RM400 million (US$114.3 million).
Naruhito Kuroda, managing director of AEON, clarified that the Sukuk’s proceeds will be used to fund the company’s present and future investments. It will also be used for working capital. He said: “We will invest about RM25 million [US$7.13 million] to RM30 million [US$8.56 million] within a year. We are eager to expand our branch network and automated teller machines under the credit card business.” The company plans to expand from its 24 branches to between 42 and 50 in the next four years.
Kuroda also added that the company is confident of achieving a 100% growth in sales, up to RM650 million (US$185.7 million) in the first quarter of 2007.
AEON’s executive director, S. Krishnappan, expects the first drawdown to raise an estimated RM80 million (US$22.8 million) by the end of February 2007. “Of the proceeds, we may use RM60 million to pay off our debts. Currently, our borrowings from banking sources were RM435 million,” he added. The Sukuk’s yield is estimated to be between 4% to 4.5% a year.
The CP/MTN programs will accord AEON Credit the flexibility to issue CP and/or MTN at different tenors to meet its short to medium-term funding requirements. The company also has the alternative to issue its CP in various tenors of below 12 months and MTN in tenors of one to five years.
The Islamic Sukuk will be executed under the principle of Musharakah. |
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