PLDT has announced that it has closed a five year, $50 million sale of future receivables in a deal arranged by Crosby, the pan Asian investment bank. The deal is noteable in that it is the first time that PLDT has targeted the Islamic financinal market for its funding.
Essentially, PLDT is selling future receivables from certain defined telecom assets into a special purpose vehicle which is being funded by a group of purchasers arranged by Crosby. These investors include a number of Islamic instiututions who have bought the equivalent of an Ijara or lease. This structure allows PLDT to meets its debt and covenant obligations, while also making it Islamic compliant for the particiapting institutions. Terms of the pricing were not disclosed.
"The completion of this transaction is another demonstration of investor confidence in PLDT, particularly after the company has completed its liability management programme," says Anabelle Lim Chua, Treasurer of PLDT in Manila. "We're pleased that with this transaction we are able to further diversify our funding sources." Proceeds from the deal will go towards general working capital for PLDT.
The deal marks a noteable expansion of Islamic finance into Southeast Asia. The Islamic institutions that lead arranged the Ijara were ABC Islamic Bank and Shamil Bank, both from Bahrain. Further participation in the deal came from Union Banque Arabe Francaise, Emirates Bank International of Dubai, Al Jazeera Bank of Saudi Arabia and Bank Islam from Malaysia. "There's clearly an interest on the part of Middle East invesors in this part of the world," comments Joey Borromeo, managing Director of Crosby in Manila.
The deal is something of a triumph for Crosby, which claims to have won a number of further Islamic deals on the back of this transaction. The firm approached PLDT with the idea back in July and terms were signed on the last day of October. Between then and now PLDT and its advisers have been working feverishly to meet all the conditions precedent, prior to closure of the deal last Thursday.
The legal representation on the deal came from Richards Butler, which acted for the issuer, and Eversheds, which acted for the investors.
