The producer of methanol Malaysia, Sarawak Petchem, gained M$4bn from Sukuk offering. The company tracks the U.S. dollar syndicated bank loan for a rare large project financing. It underscores the local debt markets to give more allocation for major projects. Actually, this is Malaysia’s biggest project bond, especially for a greenfield project. Previously in 2018, Edra Energy did the same thing. The firm gained M$5.08bn from Sukuk offering. This is for Edra’s 2.242MW combined cycle fast-turbine power project in Malacca, said IFR Asia. This deal remains the biggest power financing in the country up to this day.
Sarawak Petchem on the other hand, would use the fund to develop and construct a methanol plant in Bintulu and other facilities. The fund allocations also go to the repayment of shareholders and bank loans. The earlier estimation of the plant cost covers around 1.7m tonnes annually. This is at $1.6bn with the completed set for 2021. If it was not because of Covid-19. The project was delayed until 2023.
Furthermore, there is actually no project updated for the cost allocation. But the debt estimation took around $1.33bn and $1.4bn. The project funds comprise 80/20 debt/equity. This debt comprises Sukuk offering as well as U.S. dollar loan. The joint lead managers for the Sukuk as well as mandated lead managers for syndicated loans are two banks. They are Maybank Investment Bank and RHB Investment Bank.
Basically, the greenfield project funds are not common globally. This is because the fixed income investors do not have direct connection to project sponsors. Plus, they don’t have recourse for the stable stream revenue during project building.