SL Agritech to raise P2 billion from corporate note issuance

MANILA, Philippines — Hybrid rice producer SL Agritech Corp. (SLAC) is set to raise up to P2 billion from the issuance of corporate notes, which aim to support the company’s continued expansion and other projects with socio-economic benefits.

In a recent investors’ briefing, the company said the social finance instrument would support its continuing expansion, which has become critical as it pursues Philippines’ food security goals.

Based on the indicative term sheet for the offering, the social financing instrument in the form of corporate notes, which is targeted to be issued in May, will be drawn in one or more tranches over three years.

The issuance to be managed and arranged by MIB Capital Corp., has merited the approval of global assurance and risk management provider DNV Business Assurance Pty. Ltd., according to Thomas Leonard of DNV.

DNV made a second party opinion assuring investors that the offering will enable the firm to raise capital for a project that has social benefits.

“SLAC currently meets the criteria established in its Eligibility Assessment Protocol (that is) aligned with the stated definition of social bonds and loans,” it  said.

Asian Development Bank (ADB) financial sector specialist Konsintr Puongsophol said that there has been a steadily increasing demand for sustainable bonds such as SLAC’s social finance instrument.

He said that global sustainable bonds doubled to $1.479 trillion in 2021 from $745.4 billion in 2020.

“Globally, the volume of labeled sustainable finance products is not keeping up with investor demand.  All deals are seeing oversubscription and more favorable issuance,” said Puongsophol.

ADB extends technical assistance to support issuers of sustainable bonds. The bonds should be issued in the local currency, Philippine peso, of ASEAN Plus 3 markets.

“We are very proud to be the first receiver of a social finance instrument in the Philippines,” said SLAC Chairman Henry Lim Bon Liong.

A review and finalization of the terms of the notes will be done from April 18 to 27, while signing of the financing facility is targeted on May 2.

SLAC said  proceeds of the issuance would be used to finance or refinance eligible social projects as identified by the social bond principles 2021.

The company recently established its Social Finance Framework (SFF) and Corporate Social and Sustainability Committee to oversee socio-economic development projects.

Leonard said the firm’s SFF is aligned with International Capital Market Association Social Bond Principles (ICMA SBP) and ASEAN Capital Markets Forum ASEAN Social Bond Standards (ASBS).

Among the company’s socially eligible projects are contract growing program for rice and hybrid seeds; the hybrid rice technology demonstration program; the research and development of hybrid seed varieties; the provision of harvest performance award to motivate farmers to raise yield and productivity; and plant expansion programs aimed at generating more employment for farmers and agricultural sector as well promoting economic growth in rural communities.

SLAC has engaged in a continuing expansion every two years.  Its hybrid rice plant production and seed processing sites including expansion sites are in Talavera, Nueva Ecija; Banay Banay, Davao Oriental; Victoria, Tarlac; and Matanao, Davao del Sur.

“Through our plant expansion program, we are able to help more farmers and provide employment to those in the agricultural sector.  We are contributing to the economic growth in the target locations and nearby rural communities,”Lim said