Arabian Centres Company (“ACC” or “the company”), the leading owner, developer and operator of lifestyle shopping centres in Saudi Arabia, announced today the completion of the offering and pricing of its USD 500 million Sukuk issuance, part of a successful USD 1.9 billion refinancing package comprising both the Sukuk and new bank debt, with settlement of the Sukuk to take place on 26 November 2019.
The fixed-rate, US dollar-denominated Sukuk, with a tenor of 5 years, carries a coupon rate of 5.375%. The issue was 4 times oversubscribed, with Non GCC international investors accounting for 84% of the total transaction allocation and is accompanied by an inaugural Issuer Rating of BB+ from Fitch Rating Agency and Ba1 from Moody’s. The strength and depth of the book demonstrated global investors’ strong appetite for Saudi exposure and Arabian Centres lifestyle offering. This transaction represents a milestone capital raise for the private sector in Saudi Arabia giving Arabian Centres access to global debt capital markets, and more favorable credit terms, which optimizes the capital structure commensurate with its strong financial position. For international investors, it represented an attractive option to gain exposure to the Saudi consumer and retail real estate sectors at time of dynamic shifts in consumer preferences.
“Having executed a successful initial public offering of our stock and familiarized the broader market with our unique value proposition, we are very pleased to further diversify our funding mix by tapping into the debt capital markets,” said Olivier Nougarou, CEO at ACC. “As we expand our portfolio of prime leisure hubs in the Kingdom’s most important population centres, this transaction will provide ACC with optimum cash resources and liquidity to pursue our medium-term expansion plans and develop the world class retail product that the sophisticated Saudi consumer now demands.”
As part of its holistic capital optimization strategy, the company has also signed new Ijara and Murabaha term facilities together with a revolving Murabaha facility, which, in combination with the Sukuk proceeds, will refinance ACC’s existing bank facilities, extending the company’s debt maturity profile, increasing flexibility to invest in the business and reducing secured debt as a proportion of the company’s overall borrowing.
Specifics of the transaction include:
i) a senior unsecured Shari’ah compliant Sukuk offering of SAR 1.9 billion (USD 500 million); and
ii) senior secured Ijara and Murabaha duel currency term facilities of SAR 4.5 billion (USD 1.2 billion) and a senior secured dual currency revolving Murabaha facility of SAR 0.75 billion (USD 200 million).
“We believe that the surest way to ensure sustainable growth and drive footfall in our properties is to deepen and broaden the Company’s market reach by investing further in the lifestyle experiences offered at our properties — and by providing a diverse range of differentiated shopping and entertainment experiences,” Nougarou added. “With six projects expected to provide more than half a million square meters of additional GLA by 2024 and new entertainment destinations planned across the Kingdom in ACC’s near-term pipeline, we are highly confident in the ability of ACC’s business model to continue delivering superior returns. To this end, an optimal capital structure will place the Company in a prime position to benefit from favorable long-term macro fundamentals and the Kingdom’s growing commitment to the development of leisure, entertainment, and culture.”
Joint Global Coordinators for the Sukuk: Goldman Sachs International and HSBC Bank plc.
Joint Lead Managers and Joint Bookrunners for the Sukuk: Goldman Sachs International, HSBC Bank plc, Credit Suisse Securities (Europe) Limited, Emirates NBD Capital Limited, Mashreqbank psc, Samba Capital and Investment Management Company and Warba Bank K.S.C.P.
Legal Advisors:
White & Case LLP and The Law Firm of AlSalloum and AlToaimi in association with White & Case LLP acted for the Issuer
Clifford Chance LLP and Abuhimed Al-Sheikh Al-Hagbani Law Firm acted for the Banks
Financial Advisors:
Houlihan Lokey (MEA Financial Advisory) Ltd. and Swicorp were Financial Advisers to ACC