The world’s fourth-largest cocoa grinder Guan Chong Bhd is set to accelerate expansion in Europe with the gearing up of up to RM800 million Islamic medium-term notes (sukuk wakalah).
The sukuk wakalah has a tenure of 20 years and is assigned a preliminary rating of AA-IS with a stable outlook by Malaysian Rating Corp Bhd.
The funds raised will be used to finance Guan Chong’s general working capital, capital expenditure (capex), refinancing of financing/borrowings and other general corporate purposes.
CEO and MD Brandon Tay Hoe Lian said the sukuk wakalah programme will provide adequate funds for the company’s working capital and capex requirements, in support of the ongoing expansion of its international operations.
“Proceeds from the first tranche of issuance of RM300 million will go towards funding the ongoing construction of our new cocoa grinding facility in Cote d’Ivoire, which is targeting to commence operations in the second half of 2021. The programme will also support our expansion in Europe, following our acquisitions of industrial chocolate provider Schokinag in Germany, and the land and building in the UK,” he said in a statement yesterday.
Tay further commented that the group’s growth trajectory in the recent past had been mainly powered by capacity expansions in South-East Asia serving global clientele.
Guan Chong is currently setting up a 60,000-metric-tonne (MT) cocoa grinding facility in Cote d’Ivoire — at an estimated cost of between €50 million and €60 million (RM293.1 million) — as the first phase of its investments into the world’s largest cocoa beans producing country.
It said the new facility will increase the group’s annual grinding capacity from 250,000MT to 310,000MT.
Apart from supporting its growth in the international markets, the new grinding facility in Cote d’Ivoire will also supply cocoa ingredient requirements for the group’s German operations, as well as support its expansion in Europe.
In January, Guan Chong acquired century-old German industrial chocolate producer Schokinag Holding Gmbh, effectively expanding its presence into the European market. This was followed by its land and building acquisition in Suffolk, UK, in September, where it plans to convert the facility to produce cocoa ingredients.
After the first tranche of issuance of sukuk wakalah, the group’s gross gearing as at June 30, 2020, is expected to increase to 0.8 time from 0.6 time, consisting of mainly short-term borrowings.
Source The Malaysian Reserve