Halcyon Agri controlling shareholder offers US$50m revolving loan facility

NATURAL rubber supplier Halcyon Agri Corp has signed a facility agreement with its controlling shareholder, Sinochem International (Overseas), for a revolving loan facility of up to US$50 million.

This is meant to improve the financial flexibility of Halcyon Agri and its subsidiaries and provide additional capital for general working capital amid the challenges and uncertainties brought by the Covid-19 pandemic, the mainboard-listed firm said in a filing on Tuesday (Oct 12) evening.

It noted that the container shortages and longer shipping times, which increase working capital cycles, are expected to continue in the near term, given that the pandemic has disrupted the shipping industry.

Sinochem International (Overseas) has a direct stake of about 55 per cent in Halcyon Agri, and is a unit of Shanghai-listed state-owned enterprise Sinochem International Corp.

Halcyon Agri said: “Sinochem strongly supports its sole natural rubber franchise and will, from time to time, provide financial support” to the group when necessary.

The loan carries interest of 1.8 per cent per annum, and expires on Feb 28, 2022.

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The amount of each drawdown under the revolving facility will be 95 per cent of the total outstanding trade receivables under the invoices presented by Halcyon Agri's subsidiaries.

The entry into the facility agreement constitutes an interested-person transaction (IPT), with a total value of US$435,000 assuming the maximum US$50 million amount of the loan is fully used and remains outstanding until Mar 31, 2022.

Halcyon Agri said it is not required to seek shareholders' approval for the loan because the total value of all its IPTs with Sinochem amounted to only 0.4 per cent of the group's audited consolidated net tangible assets as at Dec 31, 2020.

Its audit committee is of the view that the loan and the interest rate are on normal commercial terms and are not prejudicial to the interests of the company and its minority shareholders.

Shares of Halcyon Agri finished unchanged at S$0.245 on Tuesday (Oct 12), before the announcement.

READ MORE: Halcyon Agri swings to profit in H1 amid higher rubber prices