• IOI Corporation (IOI) has offered to buy back the US$600mil 4.375% notes due 2022 from the holders. The purchase price is US$1,023 per US$1,000 of the nominal amount of the notes.

• IOI has also proposed to issue a US$1.5bil Euro Medium Term Note (MTN) programme. During the allocation of the new notes, IOI may give preference to holders of the US$600mil 4.375% notes, who have tendered or given intention that they plan to tender the notes to IOI.

• We believe that IOI is taking advantage of the low interest rate environment to raise funds and refinance the US$600mil notes early.

• We do not expect significant changes to IOI’s net gearing or interest expense as the US$1.5bil Euro MTN is expected to replace the US$600mil 4.375% notes.

• We believe that IOI is raising funds for future investment opportunities, including acquisitions of plantation land and expansion of the oleochemical business. IOI’s net gearing stood at 28.7% as at end-June 2021. Gross cash stood at RM2.0bil.

• In July 2021, IOI proposed to acquire 3,746.44ha of planted areas in Sabah for RM226.6mil from NPC Resources. However, the proposed acquisition was cancelled in September 2021.

• We maintain HOLD on IOI with a fair value of RM4.20/share.

Source: AmInvest Research - 20 Oct 2021