IOI Corporation - Proposes US$1.5bil EMTN Programme BUY

Date: 
2012-05-16
Firm: 
AMMB
Stock: 
IOICORP
Price Target: 
5.95
Price Call: 
BUY
Last Price: 
3.95
Upside/Downside: 
+2.00 (50.63%)

- IOI Corporation Bhd has proposed to establish a Euro Medium Term Note (EMTN) Programme with an initial programme size of US$1.5bil (RM4.6bil). 

- IOI intends to use the net proceeds from the EMTN Programme to fund capital expenditure, investments/acquisitions, working capital and repayment of existing borrowings. 

- Notes issued under the EMTN Programme may be listed on the Singapore Exchange Securities Trading Ltd. The joint lead arrangers and dealers of the EMTN Programme are HSBC, Mitsubishi UFJ Securities International, Citigroup and Morgan Stanley. 

- The maturity and interest rate of the EMTN Programme have not been fixed yet.

- The size of IOI's proposed EMTN is large. In the past, IOI had issued three tranches of exchangeable bond issues amounting between US$310mil to US$600mil each. IOI had also carried out a 1-for-15 rights issue in 2009, which raised proceeds of RM1.2bil.   

- We believe that IOI would be using part of the EMTN proceeds to redeem its US$600mil (RM1.8bil) exchangeable bond issue, which is due on 15 January 2013. The exchangeable bond is out-of-money as the exercise price is RM10.73/share.

- We also reckon that IOI would be using some of the EMTN proceeds to develop its property projects in Singapore. Early this year, IOI paid S$408mil (RM988.4mil) for a parcel of land near the Clementi Mass Rapid Transit Station.  

- Also, IOI's share of the development cost of South Beach property project is estimated at S$1bil (RM2.4bil). The South Beach project is targeted for completion in 2015F. 

- There is a possibility that IOI may be looking to expand its plantation landbank. Since the cancellation of the acquisition of 11,978ha of oil palm estates in Sabah from Dutaland Bhd for RM830mil cash, IOI has not announced any purchase of plantation landbank.   

- IOI remains a BUY for the turnaround in the growth of its palm oil production. For the first time in three years, the group's FFB output is envisaged to expand 5%-8% in FY12F.

Source: AmeSecurities
Discussions
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chongkonghui

Good move? Borrow more to repay existing. Borrow USD to repay USD loan.

2012-05-16 11:39

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