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

Deals of the Year 2007 Handbook
Engro Chemical Pakistan (continued...)
future date to the investment agent. Under the agreement,
the company shall request the investment agent to make
periodic “stage payments” to fi nance the procurement
and construction of the project.
Forward lease agreement: The investment agent undertakes
to lease its undivided interest in the project to the
company upon completion of construction. During the
construction period, the company shall pay advance rentals
to the investment agent, which are formula-driven and
benchmarked to LIBOR.
in the project under certain circumstances. The exercise
price is benchmarked to the unpaid fi xed rentals.
Purchase undertaking: The company provides the investment
agent a unilateral purchase undertaking, under
which it undertakes to purchase from the investment all or
part of its interest in the project upon maturity or the occurrence
of a dissolution event. Again, the exercise price is
benchmarked to the unpaid fi xed rentals.
Post-completion, the lease will begin and the company
shall pay actual rentals to the investment agent. Rentals
consist of: (i) a fi xed element equal to the aggregate of the
stage payments; and (ii) a variable element benchmarked
to LIBOR.
Service agency agreement: The investment agent appoints
the company to maintain and service the project once
complete.
Sale undertaking: The investment agent provides the
company a unilateral sale undertaking, under which it
undertakes to sell to the company all or part of its interest
This case study was written by Faisal Fazli, Global Islamic
Banking, Citi. He can be contacted at +971 4509 9774 or
via email at faisal.fazli@citi.com
Page 58
www.IslamicFinanceNews.com