Jun 23, 2020 (LBO) – Sri Lanka's diversified John Keells Holdings on Tuesday entered into a long-term financing agreement with the International Finance Corporation (IFC) for US Dollars 175 million to support funding of the Company’s investment pipeline.
The company said in a stock exchange filing that this facility is IFC’s largest investment to-date in Sri Lanka.
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The proceeds from the facility will primarily be utilised to fund the Group’s expansion of its supermarkets business, recent investments in hotels in the Maldives and Sri Lanka and for general corporate investments.
Given the investment pipeline of the Group, JKH has been exploring funding alternatives to further strengthen its balance sheet since late-2019.
"IFC has been a longstanding partner of JKH, and this facility will afford the Group the flexibility and agility to fund its investments in an optimal manner," the JKH said.
The facility provides additional support to the Group’s liquidity position considering the extended tenor and grace period before capital repayments commence.
"While the Covid-19 pandemic resulted in short-term impacts to JKH’s businesses, the Group is witnessing positive momentum at present and remains positive on the medium to long-term prospects for its businesses and related investment pipeline," the company said.
"The Group believes that partnering with an internationally reputed financial institution such as the IFC, particularly at this juncture of time, is a vote of confidence for JKH and the country."
Key features of the financing facility:
• Rate basis: 6-month LIBOR plus margin of 380 basis points (based on the 6-month LIBOR as of date, the initial interest rate on the loan will be 4.21 per cent per annum)
• Step-down pricing mechanism: A step-down pricing mechanism to a margin of 355 basis points by March 2024
• Tenor: Ten-year tenor till June 2030
• Grace period: Four years with capital repayments commencing in December 2024