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Saturday, April 20, 2024

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Case study: Solarpack Suria Sungai Petani’s green Sukuk to refinance bridge loan

Independent power producer Solarpack Suria Sungai Petani (3SP) has issued a RM285 million (US$63.32 million) 38-tranche green Sukuk facility to refinance its RM275 million (US$61.1 million) conventional bridge loan from Maybank for the construction of a solar power plant in Kedah, Malaysia.

The facility was issued under its one-time issue RM305 million (US$67.76 million) Sukuk program established primarily to refinance the conventional loan. Maybank Investment Bank declined to comment on the reason for using Sukuk to refinance the conventional facility.

3SP is the Malaysian project of solar power multinational Solarpack, which is headquartered in Getxo.

“This is a landmark transaction for Solarpack as it represents the first green project bond issuance by Solarpack allowing us to broad-base the debt financing sources for our projects beyond the traditional loan market as we scale up,” Aditya Kulshrestha, the head of project finance for Asia and Africa for Solarpack, noted in a press statement.

Arranged by Maybank Investment Bank, the coupon rates range from 4.4% to 5.78% while tenors range from one year to 19.5 years.

According to Aditya, the tenors of the facilities were structured to closely match the cash flow generation from the 3SP project.

With Solarpack starting its operations in Malaysia in 2016, 3SP was awarded a 21-year power purchase agreement for the 90.88-megawatt plant with Tenaga Nasional under Malaysia’s Large-Scale Solar 3 scheme.

The plant achieved commercial operations on the 8th March 2022, delayed from its initial 31st December 2021 target.

While Solarpack owns a minority share (49%) in the 3SP project via Solarpack Asia with the remaining 51% owned by JKH Renewables, it retains the controlling stake in the project as the terms of the tripartite shareholders’ agreement provide that Solarpack Asia retains management and operational control of 3SP.

“Solarpack Asia’s control of 3SP is further evidenced by the accounting consolidation of 3SP in the former’s books despite it not being a majority shareholder,” RAM Ratings, which provided the second-party opinion on the Sukuk program, detailed.

Solarpack’s debut SRI Sukuk

RM285 million (US$63.32 million)


6th April 2023
Summary of terms and conditions
Issuer
Solarpack Suria Sungai Petani
Size of issue
RM285 million (US$63.32 million)
Purpose
Refinance a RM275 million (US$61.1 million) conventional bridge loan from Maybank for the construction of a solar power plant
Tenor
One year to 19.5 years
Profit rate
4.4–5.78%
Payment
Semi-annual
Currency
Malaysian ringgit
Maturity date
5th April 2024–6th October 2042
Principal advisor(s)
Maybank Investment Bank
Joint lead manager(s)
CIMB Investment Bank, Maybank Investment Bank
Other green structuring advisor(s)
Maybank Investment Bank
Governing law
Malaysian law
Legal advisor(s)/council
Zaid Ibrahim & Co (acting for the principal advisor), Christopher & Lee Ong (acting for the issuer)
Islamic structure
Wakalah Bi Istithmar, Murabahah via Tawarruq arrangement
Underlying asset
Shariah compliant commodities
Rating
‘AA2/Stable’ from RAM Ratings
Shariah advisor(s)
Maybank Islamic
Tradability
Yes

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