RAKIA Sukuk (continued...) - Islamic Finance News

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Deals of the Year 2007 Handbook RAKIA Sukuk (continued...) or on the redemption of the Sukuk. Under the purchase undertaking, RAKIA agrees to purchase the issuer’s rights, interest and title over the assets at a specified price on a specified date following the issue of a notice from the issuer. The notice will be served by the issuer either upon the occurrence of an event of default or immediately before the maturity date of the Sukuk, and the assets will be sold to RAKIA under a separate sale agreement. (iv) Sale undertaking This undertaking was given by the issuer in favor of RAKIA. Under the sale undertaking, the issuer agrees to sell its rights, interest and title over the assets at a specifi ed price if there are changes in the taxation laws in the issuer’s and RAKIA’s jurisdiction. (v) Sales contract undertaking This undertaking was given by RAKIA in favor of the issuer, where RAKIA in its own independent capacity guarantees that the works will have a value of US$125 million following its completion. In addition, RAKIA also guarantees the payment performance of the third party developers for at least US$200 million. This will ensure that the full amount of the Sukuk will be recoverable at maturity, given that RAKIA will only acquire the works pursuant to the purchase undertaking at maturity. The terms of this undertaking are designed to ensure that the investors will receive the outstanding principal amount in a manner that fi ts into the Sukuk structure. (vi) Guarantee deed The guarantee was issued by the government in favor of the issuer, where the government irrevocably and unconditionally guarantees RAKIA’s payment obligations under the transaction. DISTRIBUTION ANALYSIS Middle East (75%) United Kingdom (12%) Rest of Europe (13%) Despite the difficult market conditions brought on by the international liquidity crunch during the time of closing, the transaction was oversubscribed beyond the issue size. The final distribution achieved investor diversification with banks comprising 53% of the investors, while corporates, private banks and fund managers made up the remaining 47%. RAKIA managed to establish new investor relationships while maintaining balanced distribution between traditional fi xed-income and buy-and-hold investors. The transaction was an important test of investor appetite for Sukuk from the Middle East in light of the credit crisis which began in mid-2007, a test that RAKIA passed. Banks (53%) Corporates (20%) Private Banks (22%) Fund Managers (5%) This case study was written by Iza Sheryl Kamaludin, a senior associate at HSBC Amanah. She can be contacted via email at iza.kamaludin@hsbc.com Page 26 www.IslamicFinanceNews.com
TERMSHEET RAKIA Sukuk INSTRUMENTS ISSUER PRINCIPAL ACTIVITIES DATE OF LISTING ISSUE SIZES Sukuk RAKIA Sukuk Company Limited Established for the purpose of issuing the Certifi cates and entering into the transaction 5 th December 2007 (UKLA and DIFX) US$325 million DATES OF ISSUE 5 th December 2007 MATURITY 5 th December 2012 PROFIT PAYMENT SCHEDULE SHARE CAPITAL IDENTIFIED ASSETS LEAD MANAGERS AND BOOKRUNNER SENIOR CO. LEAD MANAGERS CO. LEAD MANAGER LEGAL COUNSEL FINANCIAL ADVISOR GUARANTOR DELEGATE PRINCIPAL PAYING AGENT/ REGISTRAR SHARIAH ADVISOR PURPOSE OF ISSUE RATINGS DIVIDEND PER UNIT 3 month LIBOR + 150 bps Bullet US$50,000 (divided into 50,000 shares of a par value of US$1.00 each) Land and infrastructure works Credit Suisse, HSBC, NBD Investment Bank Boubyan Bank, Gulf International Bank, Qatar National Bank Al Watani Daiwa Securities SMBC Europe Allen & Overy (Legal Counsel to Lead Arrangers) and Lovells (Legal Counsel to Issuer) N/A Government of Ras Al Khaimah HSBC Trustee (C.I.) Limited HSBC Bank plc Central Shariah Committee of HSBC Amanah and Shariah Advisory Board of National Bank of Dubai Investment Bank The proceeds from the Sukuk issue will be used in part to purchase the Project Land and in part for the completion of the Works Not Rated N/A www.IslamicFinanceNews.com Page 27
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