RAKIA Sukuk (continued...) - Islamic Finance News
RAKIA Sukuk (continued...) - Islamic Finance News
RAKIA Sukuk (continued...) - Islamic Finance News
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Deals of the Year 2007 Handbook<br />
Kuala Lumpur Sentral US$225 million<br />
<strong>Sukuk</strong> Musharakah<br />
HSBC Bank Malaysia and Kuwait <strong>Finance</strong> House (Malaysia)<br />
(KFHM) acted as joint lead managers and joint lead arrangers<br />
for Kuala Lumpur Sentral (KLS)’s RM720 million (US$225.4<br />
million) <strong>Sukuk</strong> Musharakah. In addition, KFHM was the Shariah<br />
adviser and credit enhancement provider, whereby it<br />
undertook to buy certain project lands under a put option<br />
contract (POC) for the transaction. The <strong>Sukuk</strong> were issued<br />
on the 6 th April 2007.<br />
BACKGROUND OF THE ISSUER<br />
KLS was incorporated on the 7 th November 1994 as a joint<br />
venture company to carry out the design and construction<br />
works in respect of the Kuala Lumpur Sentral Station Complex<br />
(KL Sentral). The joint venture partners are Malaysian<br />
Resources Corporation, Keretapi Tanah Melayu and Pembinaan<br />
Redzai.<br />
The concession agreement was signed on the 18 th August<br />
1997, pursuant to which KLS was required to build an integrated<br />
railway station and hand it over to the government<br />
of Malaysia. The construction of KL Sentral Station<br />
has been completed.<br />
In return for constructing the KL Sentral Station, KLS was<br />
granted the development rights over the remaining site for<br />
commercial property development, which makes up approximately<br />
62 acres surrounding the KL Sentral Station.<br />
Pursuant to a supplementary agreement signed by KLS, the<br />
government of Malaysia and Syarikat Tanah dan Harta on the<br />
10 th March 1999, the government of Malaysia was to transfer<br />
such lands to KLS based on the progress of construction works.<br />
To date, all such lands have been transferred to KLS.<br />
RATING<br />
Rating Agency Malaysia (RAM) has assigned a rating of<br />
AA2(s) to KLS, which indicated high safety for timely payment<br />
of profi t and principal. The rating is a much improved<br />
rating from the former Al-Bai Bithaman Ajil <strong>Islamic</strong> Debt Securities<br />
(BaIDS), which was accorded a rating of A+ID(s).<br />
UTILIZATION OF PROCEEDS<br />
KLS was to utilize the proceeds to repurchase and cancel<br />
its outstanding BaIDS. The transaction also involved negotiation<br />
with the existing BaIDS holders for the early redemption<br />
of the BaIDS at a price acceptable to the BaIDS holders<br />
as well as KLS.<br />
THE MUSHARAKAH STRUCTURE<br />
KLS will enter into a Musharakah agreement for the purpose<br />
of undertaking a Musharakah venture (see chart below)<br />
<strong>continued</strong>...<br />
Investors<br />
KLSSB<br />
issues<br />
<strong>Sukuk</strong> and<br />
receives<br />
proceeds in<br />
return<br />
1 5<br />
Proceeds<br />
from PU for<br />
<strong>Sukuk</strong><br />
redemption<br />
and profit<br />
payments<br />
Trustee<br />
• Trustee<br />
over seeing<br />
the Musharakah<br />
• Musharakah<br />
partners appoint<br />
KLSSB as the<br />
Project Agent<br />
KLSSB (as Wakeel<br />
to Investors)<br />
4<br />
Purchase Undertaking<br />
(“PU”)<br />
KLSSB<br />
Put Option<br />
KFHM<br />
Distributable profit to be<br />
shared semi-annually<br />
based on an agreed<br />
profit-sharing ratio<br />
3 2<br />
Stake of Musharakah<br />
partners based on<br />
their capital<br />
contribution<br />
Musharakah Venture<br />
to sell Project Lands<br />
www.<strong>Islamic</strong><strong>Finance</strong><strong>News</strong>.com<br />
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