IFC package of $175 m to fund JKH’s long term investments
View(s):John Keells Holdings PLC (JKH) has entered into a long-term financing agreement with the International Finance Corporation (IFC) for US$175 million to support funding of the company’s investment pipeline.
The agreement formalising the facility was signed between the IFC and JKH on June 23, JKH – a listed entity – said in an announcement to the Colombo Stock Exchange on Tuesday. This facility is IFC’s largest investment to-date in Sri Lanka.
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.
The key features of the financing facility are as follows: 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 2024Tenor: Ten-year tenor till June 2030Grace period: Four years with capital repayments commencing in December 2024
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 statement 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 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,” it said.