Malaysia's Tiong Nam Logistics to Issue Property Backed Bonds

Yahoo Finance - March 22, 2006

Tiong Nam Logistics Bhd. (8397.KU) is looking to raise around MYR150 million ($40.6 million) through the issue of MYR269.41 million in discounted asset-backed Islamic securities in the second quarter of the year. The Malaysian haulage firm wants to raise the funds to reduce debt and for working capital.

Five units of Tiong Nam sold assets including warehouses and offices to a special purpose vehicle called ABS Logistics Bhd. for MYR191.6 million. The units also agreed to lease back the assets for up to 10 years. ABS Logistics will sell five classes of discounted Islamic securities using the Ijarah - or leaseback principle. The Class A paper will be for around MYR100 million, the Class B for around MYR20 million, the Class C at MYR40 million, the Class D at MYR44.5 million and the Class E for around MYR64.91 million. The vehicle will fund the purchase of the assets with MYR147 million in cash and the proceeds from the MYR44.5 million mezzanine notes.

As part of the structure, Tiong Nam will have the option to buy back the assets at their fair market value 12 months prior to the expiry of the lease. If it elects not to exercise the option, ABS Logistics Bhd. has the right to sell the assets to other buyers. The offering is subject to approval by the Securities Commission and Tiong Nam shareholders. Sphere: Related Content