A decision on where to list the business will likely be made by the summer.

 

Olam International said on Thursday (April 29) its soon-to-be listed food ingredients business will buy US spice company Olde Thompson at an enterprise value of US$950 million (S$1.26 billion).

 

The agri-food giant plans to separate and list Olam Food Ingredients (OFI), which includes cocoa, coffee, and edible nuts, by the first half of next year as part of a wider restructuring that would see it split into two new operating businesses.

 

A decision on where to list the business will likely be made by the summer, Olam International chief executive officer Sunny Verghese had said in February.

 

Olam' s purchase of the 77-year-old US private-label spice supplier from its management shareholders and Kainos Capital is expected to support earnings and margins from its first year in the OFI fold, potentially adding US$25 million to US$30 million towards core earnings.

 

&ldquo This transaction builds on our long 15-year partnership with Olde Thompson,&rdquo OFI chief executive officer A. Shekhar said. &ldquo Growing our offerings of private label solutions is right at the heart of OFI&rsquo s strategy - and within that spices is one of the most attractive and growing categories, especially in the US.&rdquo  

 

The deal, he added, would help bridge the gap between OFI&rsquo s presence in production and supply to dealing with US retail customers. The transaction is expected to close in the second quarter.

 

Olam said the total consideration sum fore the acquisition will be subject to net working capital adjustment at closing based on good-faith estimates provided by Olde Thompson, estimated transaction expenses, as well as a US$5 million adjustment escrow payment, among others.

 

For illustrative purposes, Olam projects a total consideration of approximately US$727.5 million based on the unaudited FY2020 financial statements of Olde Thompson.

 

In its announcement, Olam also said the proposed purchase will build on its recent two acquisitions in the North American spices sector, namely US-based chilli pepper business Mizkan America, and the onion ingredients business of Cascade Specialties.

 

Highlighting OFI' s spices business as an " attractive and growing part of (the unit' s) overall portfolio" , Olam said Olde Thompson will create a substantive growth platform for OFI to provide similar sustainable and innovative retail solutions across its other products.

 

The proposed deal will also enable OFI to combine its strengths in global origination and sustainable supply chains with Olde Thompson' s capabilities to provide retail spice solutions to offer differentiated value to customers, it added.

 

AGRI-FOOD giant Olam International plans to issue S$100 million of perpetual securities, which will be consolidated with its existing S$250 million perps issued on Jan 18. Together, these issuances will form a single series.

 

The new perps are expected to be issued at 100.013 per cent of the aggregate principal amount plus accrued interest from Jan 18 to April 25. The issue date will fall on April 26, Olam said in a bourse filing on Tuesday.

 

The perps will bear a 5.375 per cent distribution rate for the first five years. At the end of this time period, the distribution rate will reset at a rate equivalent to the prevailing swap offer rate plus the initial spread of 4.807 per cent, plus the step-up margin of 2 per cent.

 

They fall under the group' s US$5 billion euro medium-term note programme.

 

Olam will use the issuance' s net proceeds for working capital purposes and general corporate purposes. These include financing capital expenditure, repaying existing debt and potential acquisition opportunities which the group or its subsidiaries may pursue in the future as part of its strategic objectives.

AGRI-BUSINESS firm Olam International has secured a US$1.45 billion loan linked to its AtSource agricultural supply chain platform, the mainboard-listed firm said in a Singapore Exchange filing on Wednesday night.

 

Proceeds from this facility will be used to procure agricultural raw materials under AtSource, a " sustainability insights platform" which gives customers a view of their supply chain sustainability parameters.

 

" This unique facility links the financing to procurement done via our proprietary AtSource sustainability platform which in turn catalyses responsible data-and insights-driven growth with our customers," said Olam managing director and group chief executive officer N Muthukumar.

 

Olam' s wholly-owned unit Olam Treasury Pte Ltd is a co-borrower in the two-tier facility, which consists of a US$950 million multi-year revolving credit facility and a US$500 million three-year term loan facility.

 

The revolving credit facility is further split into three tranches: a one-year tranche of US$190 million, a two-year tranche of US$380 million, and a three-year tranche of US$380 million.

 

The facility saw participation from 18 lenders, including DBS, Standard Chartered Bank, and HSBC, which are joint AtSource programme co-ordinators for the facility. HSBC has been appointed as the facility agent.