Halcyon Agri obtains up to US$75m sustainability-linked loan from Deutsche Bank

DEUTSCHE Bank on Thursday said it has extended a three-year US$25 million sustainability-linked loan, along with an accordion feature to upsize the facility to US$75 million, to mainboard-listed natural rubber supplier Halcyon Agri Corp's subsidiary Corrie MacColl.

Loan proceeds will go into maintaining Halcyon's rubber plantations in Cameroon and Malaysia while promoting its Cameroon Outgrower Programme, which aims to provide additional food security and boost the income of 13,000 local smallholder farmers.

Throughout the life of the loan, the borrower group is required to comply with the mutually agreed sustainability framework developed by Environmental Resources Management (Singapore) (ERM), which was appointed by Deutsche Bank, Singapore Branch as consultant.

ERM will assess and/or verify compliance with the framework and review the key performance indicators (KPIs) of the loan.

Deutsche Bank said the loan complements and enhances the borrowers' existing sustainability strategy and objectives, and is another step for Halcyon to drive environmental, social and governance (ESG) standards.

The KPIs' comprehensive nature will set a new standard for the rubber industry, making this commercial loan unique, even though ESG conditions attached to loan rates are not unusual in corporate lending facilities, the lender said.

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"The finance industry can play a critical role in helping companies reach their sustainability objectives, by helping align incentives to ensure that more sustainable business practices also make good financial sense," said David Lynne, Asia-Pacific head of corporate bank at Deutsche Bank.

Halcyon's chief financial officer Jeremy Loh noted the "one of a kind" loan structure. "It was important to us to ensure that we continue to support our clients in a sustainable way, supporting our overall corporate social responsibility strategy and in accordance with developing standards for sustainable financing in the rubber industry," Mr Loh added.

Halcyon in 2014 developed its HEVEAPRO rubber processing standards, and later in 2018 released its sustainable natural rubber supply chain policy, which includes a no-deforestation commitment. Last year, the group became a signatory of the United Nations Global Compact.

Meanwhile, Deutsche Bank was a founding signatory of the UN Principles for Responsible Banking, and has committed that by 2025 its total volume of sustainable financing and investments will be at least 200 billion euros (S$314.23 billion).

This year, the bank appointed Kamran Khan to the newly created role of head of ESG for Asia-Pacific.

Shares of Halcyon rose 0.5 Singapore cent or 2.3 per cent to trade at 22.5 cents as at 3.47pm on Thursday.