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Tadawul-listed Modern Mills for Food Products lined up a SAR 871 mn in a murabaha refinancing agreement from Saudi National Bank (SNB), which will run for 14 years and 3 months, it said in a disclosure to Tadawul.
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The facility will be used to “restructure the company’s existing debt obligations,” including paying off an outstanding loan with Alinma Bank, the disclosure said. The funds will also support growth plans and shore up working capital requirements under more favorable terms and interest rates, in a bid to boost future freecash flows.
SOUND SMART- Murabaha is a leveraging strategy that often fills in for traditional loans in Islamic finance, given that interest-bearing loans are prohibited under Shariah. The transaction sees the seller and buyer agree to the cost and markup of an asset, with the markup paid back to the creditor in regular installments, thereby replacing interest payments.
