Global commodities trader Olam has secured a US$250mn sustainability-linked revolving credit facility (RCF), the pricing of which will be reduced if environmental, social and governance goals are met.
The facility is linked to meeting green key performance indicators (KPIs) and consists of three tranches: a 1-year revolving facility of US$50mn, a 2-year RCF of US$100mn and a 3-year RCF of US$100mn. Proceeds from the facility will be applied towards general corporate purposes of Olam and its subsidiaries.
ANZ, DBS Bank and Standard Chartered acted as senior mandated lead arrangers and joint sustainability co-ordinators and Rabobank as the mandated lead arranger. Standard Chartered has been appointed as the facility agent.
The interest margin on the facility is correlated to the achievement of certain improvement targets that have been identified as part of Olam’s sustainability strategy. If those targets are met, the interest margin could be lower than conventional loans, states a release by Olam.
The KPIs will be tracked and reported by Olam’s corporate responsibility and sustainability team, with global accountancy firm EY also assigned to independently assess the achievement of the KPIs.
The facility is the third sustainability-linked loan that Olam has executed in the last two years. It announced a US$525mn sustainability-linked RCF last year, which consisted of three tranches, as well as Asia’s first green club loan of US$500mn in 2018.
Elsewhere, Olam has created a finance for sustainability (F4S) unit to put a number on Olam’s non-financial performance. The team leverages the expertise of finance and accounting experts to uncover hidden costs and benefits, address the most pressing supply chain sustainability issues, as well as improve decision-making.
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