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.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....