16 February 2021
- Loan’s interest rate linked to three core sustainability KPIs
- Oversubscribed by a factor of more than two in both Thailand and Japan, demonstrating a significant step forward for Blue Finance
- Bookrunners include leading Japanese and Thai banks with major global financial institutions participating
16 February 2021, Bangkok –
Thai Union Group PCL (Thai Union), the world’s seafood leader, has closed its inaugural Sustainability-Linked Syndicated Loan (SLL) in both Thailand and Japan, the Company announced today.
This, Thai Union’s first SLL, is split into a credit facility equivalent to THB 6.5 billion, denominated in both Thai baht (THB) and United States dollars (USD), along with a USD 183 million-equivalent Ninja/Samurai credit facility denominated in USD and Japanese yen (JPY). Together, the two credit facilities are equivalent to THB 12 billion, with a term of five years. The SLL was oversubscribed by a factor of more than two times the initial facility size when first launched to the markets. The success of this closing represents a significant step forward for Blue Finance—financing related to projects that benefit our oceans—for both Thai Union and the industry as a whole,
Bank of Ayudhya PCL,
Mizuho Bank, Ltd., and
MUFG Bank, Ltd. are the Mandated Lead Arrangers and Bookrunners (MLABs) and Sustainability Coordinators for the syndicated loan. The SLL represents a milestone for Thai Union as the Company cemented the THB 6.5 billion-equivalent facility with its key onshore relationship banks including, as Lead Arrangers: KASIKORNBANK PCL; The Hongkong and Shanghai Banking Corporation Limited; and BNP Paribas; and as Arrangers: Oversea-Chinese Banking Corporation Limited, Bangkok Branch; and Sumitomo Mitsui Trust Bank (Thai PCL).
Thai Union was also able to leverage the Japanese MLABs’ investor network to enter the Japanese loan market for the first time with the raise of the USD 183 million-equivalent offshore facility. A further 19 financial institutions in Japan, including branches of foreign banks, have confirmed their participation in this offshore facility alongside the MLABs.
Interest rates for SLLs are linked to Key Performance Indicators (KPIs) around sustainability, with achievement leading to the borrower being rewarded with a reduction in interest rates. For Thai Union, these KPIs include maintaining the Company’s consistently high rankings in the S&P Global Dow Jones Sustainability Indices (DJSI); achieving the Company’s Greenhouse Gas (GHG) reduction targets; and increasing oversight in Thai Union’s international supply chains through an increase in the use of electronic monitoring (EM) and/or human observers onboard tuna vessels
[1].
Sustainalytics was appointed Environmental, Social and Governance (ESG) provider to give a second-party opinion on the KPIs and alignment to the Sustainability Linked Loan Principles. Each KPI will be verified by external organizations to ensure a fair and independent evaluation.
“Thai Union has placed sustainability at the heart of our business and, with our global sustainability strategy, SeaChange®, now entering its next phase, we are very pleased to have launched this loan, said
Thiraphong Chansiri, President & CEO of Thai Union. “This, our first Sustainability-linked Loan, reaffirms our commitment to driving meaningful change, not only in our own operations, but in the industry as a whole. The recognition from financial institutions of Thai Union’s sustainability initiatives is a testament to the hard work and success we have seen since the launch of SeaChange®, and demonstrates the growing, global focus on ethical business and investors’ desire to support companies that are truly seeking to make a difference.”
Seiichiro Akita, President and Chief Executive Officer of Krungsri (Bank of Ayudhya PCL and its business units) said, “We are very pleased to once again demonstrate our commitment to ESG financing by supporting Thai Union, a leading global company in their journey towards achieving their sustainability goals. All stakeholders have come together to work towards a common goal and successfully deliver this landmark Sustainability-Linked Loan, despite challenges including the global situation around COVID-19; setting rigorous yet appropriate KPIs; and current loan market sentiment in Japan and Thailand. "This loan also demonstrates the strong synergy between Krungsri and MUFG, harnessing the ability of both institutions to offer support and connect the dots for our customers to achieve their goals both in Thailand and beyond. We would like to congratulate Thai Union on this great success, which is certainly a crucial milestone in their ESG and sustainability journey.”
Yasuhiro Kubota, Executive Officer, General Manager of Mizuho Bank, Ltd. Bangkok Branch said, “Mizuho would like to express our sincere congratulations to Thai Union for the successful closing of this Sustainability-Linked Loan both in Thailand and Japan and we are proud to be part of Thai Union’s world-class sustainability development. Thai Union is globally recognised as one of the world’s leading seafood companies and is an industry leader in sustainability management. Mizuho believes this remarkable SLL will contribute to Thai Union’s efforts to help eliminate Illegal, Unreported and Unregulated (IUU) fishing by enhancing the traceability of raw materials in the supply chain, which is a key reason that Mizuho is providing this financial support alongside the other participating banks.”
Richard Yorke, Managing Director and Head of Global Corporate & Investment Banking, Asia Pacific, MUFG Bank said: “MUFG is pleased to have supported Thai Union in its ongoing efforts at driving sustainability in its global business. By playing a leading role in this transaction, we were able to not only demonstrate MUFG’s commitment in partnering like-minded clients to bring about positive change but also show our ability to leverage our deep experience and expertise in green financing to structure a solution tailor-made to Thai Union’s unique requirements.
“More importantly, we were able to harness our extensive network in Asia, which includes Krungsri, to facilitate distribution both in Thailand and Japan, thereby diversifying the client’s investor base and further underscoring MUFG’s strong capital market capabilities. We would like to congratulate Thai Union once again for this successful transaction.”
More information on Thai Union’s industry-leading global sustainability strategy, SeaChange® can be found
here. The Sustainalytics report on setting KPIs can be read
here.
[1] Electronic monitoring (EM) systems aim to address fishing industry issues such as improving working conditions on vessels and combatting Illegal, Unreported and Unregulated (IUU) fishing—a major threat to the sustainable use of marine resources, the diversity of marine ecosystems, and the protection of labor rights. Addressing IUU fishing is part of UN Sustainable Development Goal (SDG) 14, Life Below Water.