RIYADH, Saudi Arabia -- Arabian Centres Company (" ACC "or" the Company "), the owner, developer and operator of lifestyle-like shopping Centres in Saudi Arabia, announced the completion of a $500 million offering and pricing of Islamic Centres. The Islamic bond is part of the company's successfully completed $1.9 billion refinancing program, the other part of which is new bank debt. Settlement will take place on November 26, 2019.
The Islamic bond is a fixed interest rate, denominated in US dollars, with a five-year maturity and a coupon of 5.375%. The offering was four times oversubscribed, with non-GCC international investors accounting for 84 per cent of the total allocation and a first-time issuer rated BB+ and Ba1 by Fitch and Moody's respectively. The strength and depth of the books demonstrate the strong appetite of global investors for entry into Saudi Arabia and Arabian Centres. The transaction is a milestone for Saudi Arabia's private sector. It enables Arabian Centres to gain access to global debt capital markets and better credit terms, optimising a capital structure commensurate with its financial strength. The transaction is an attractive option for international investors to enter the Saudi consumer and retail real estate sector at a time of dynamic changes in consumer preferences.
Olivier Nougarou, CEO of ACC, said: "Having successfully completed the initial public offering of our shares and familiarized the wider market with our unique value proposition, we are pleased to further diversify our financing portfolio by entering the debt capital markets. As we expand our portfolio of major leisure center assets in Saudi Arabia's most important population centers, this transaction will provide ACC with the optimal cash resources and liquidity to execute on our medium-term expansion plans and develop world-class retail products that are currently demanded by Saudi Arabia's mature consumers."
As part of its overall capital optimization strategy, the Company has also signed new Ijara and Murabaha term credit facilities as well as a revolving Murabaha credit facility which, together with the proceeds of the Islamic bond, will refinance ACC's existing bank loans, thereby extending the Company's debt maturity and increasing the flexibility to invest in its business, And reduce secured debt as a percentage of the company's total borrowings.
Details of the transaction include:
1.9 billion riyals ($500m) of sharia-compliant senior unsecured Islamic bonds; And the SR4.5 billion (US $1.2 billion) senior secured dual currency Ijara and Murabaha Dual Currency Term Credit Facility and the SR750 million (US $200 million) senior secured dual currency Murabaha Rounding Credit Facility.
Nougarou added: "We believe the surest way to ensure sustainable growth and drive foot traffic to our properties is to deepen and broaden the company's market reach by further investing in the lifestyle experiences our properties offer and by offering a diverse and differentiated range of shopping and entertainment experiences. With six projects expected to deliver more than 500,000 square metres of additional GLA by 2024, and new entertainment destinations across the kingdom planned in ACC's near-term plans, we are confident in the ability of the ACC business model to continue to deliver strong returns. To this end, the optimal capital structure will place the company in a strong position to benefit from favourable long-term macro fundamentals and the Kingdom's continued commitment to developing the leisure, entertainment and cultural industries."
Global Joint Coordinators for Islamic Bonds: Goldman Sachs International and HSBC PLC.
Joint Lead Managers and Joint Bookrunners of Islamic Bonds: Goldman Sachs International, HSBC, Credit Suisse Securities (Europe) Ltd., Emirates NBD Capital Limited, Mashreqbank PSC, Samba Capital and Investment Management Company and Warba Bank K.S.C.P.
Legal Counsel:
White & Case LLP and The Law Firm of Alsalloum and Altoaimi represent The issuers
The banks were represented by Clifford Chance LLP and Abuhimed al-Sheikh al-Hagbani Law Firm
Financial Advisor:
Houlihan Lokey (MEA Financial Advisory) Ltd. And Swicorp as financial advisor to ACC
About the Arabian Centres Company:
Arabian Centres are leading owners, operators and developers of contemporary lifestyle-style Centres in Saudi Arabia. For more than a decade, the company has provided its customers with a variety of high-quality lifestyle centers that meet international standards in the most attractive regions of the country to meet all shopping and market needs. As of 30 September 2019, Arabian Centres operate portfolios of 21 assets in 10 major cities in Saudi Arabia. The company's development includes several iconic lifestyle centers such as the Arabia Jeddah Mall, Dhahran Mall and the Riyadh Nakheel Mall, which was recognized as the favorite shopping center for Riyadh consumers at the 2017 Arab Luxury World Forum. The company's Lifestyle Center has more than 4,100 stores and served 109 million customers in fiscal 2019.
