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Saudi German Health has started taking orders from retail and institutional investors for a SAR 1 bn sukuk issuance, it said in a Tadawul regulatory filing yesterday. It’s the company’s first debt sale under a SAR 1.5 bn sukuk programme it announced last month. The company could adjust the size of the offering after the order window closes on Sunday, 25 February.
Use of proceeds: Saudi German would use the proceeds to finance the company’s general corporate operations, after having entered into mudaraba and murabaha transactions in compliance with Shariah law, according to the base prospectus (pdf).
It’s all about keeping borrowing costs under control: “This [sukuk program] will help improve cashflow and boost profitability,” President and Deputy Chairman Makarem Batterjee told CNBC Arabia in an interview last month, estimating the healthcare provider’s total debt at SAR 3 bn.
What’s on the table: The five-year SAR-denominated sukuk carries a fixed annual yield of 7.2%. Returns will be paid out to sukuk holders on a quarterly basis. Investors can place orders for a minimum of 5 sukuks at the value of SAR 1k for each. SGH has the option of redeeming the sukuk before the expiry date.
ADVISORS– Al Rajhi Capital is quarterbacking the transaction as the sole lead manager, financial advisor and arranger. Linklatersis acting as legal advisor.
