ANSA McAL says the $765 mil­lion loan, which it raised ear­li­er this month, is go­ing to be used for sev­er­al rea­sons, all of which are in pur­suit of its goal to dou­ble the size, scale, re­turns and im­pact of the group by 2027, an ANSA McAL spokesper­son said yes­ter­day.

In a no­tice post­ed on the web­site of the T&T Stock Ex­change last week Fri­day, ANSA McAL an­nounced that it had ex­e­cut­ed a loan agree­ment on Sep­tem­ber 10, for a dual-tranche, fixed and float­ing rate, se­nior se­cured, syn­di­cat­ed term loan for the max­i­mum amount of $765 mil­lion, which is to be al­lo­cat­ed for gen­er­al cor­po­rate pur­pos­es.

Se­nior se­cured means that the loan has pri­or­i­ty over all oth­er debt of the Com­pa­ny and is se­cured by spe­cif­ic as­sets or col­lat­er­al, in this case a deben­ture.

A deben­ture is a type of debt in­stru­ment that is un­se­cured by col­lat­er­al, re­ly­ing in­stead on the cred­it­wor­thi­ness and rep­u­ta­tion of the is­suer for sup­port, ac­cord­ing to a de­f­i­n­i­tion from In­vesto­pe­dia.

The $765 mil­lion loan is se­cured by a deben­ture over fixed and float­ing charge over as­sets of the ANSA McAL Ltd.

The loan was arranged by Citibank (Trinidad & To­ba­go) Ltd with com­mit­ments from 20 lenders (the syn­di­ca­tion).

The spokesper­son ex­plained that the term of the loan is five years with the fixed in­ter­est rate tranche be­ing 5.73 per cent while the float­ing in­ter­est rate tranche is based on 90-day trea­sury bills of­fered or three-month TT dol­lar de­posits plus 300 ba­sis points.

The group said tranche A (float­ing rate) was dis­bursed in the sum of $378.8 mil­lion, with tranche B (fixed rate) be­ing dis­bursed in the sum of $386.2 mil­lion.

The covenants are the typ­i­cal and cus­tom­ary covenants for a loan of this size and cred­it-wor­thy bor­row­er, the group said.

The group raised the funds with­out hav­ing to pro­cure a cred­it rat­ing. The loan is re­payable in ac­cor­dance with an amor­ti­sa­tion sched­ule.

Re­spond­ing to the sug­ges­tion that some­times “gen­er­al cor­po­rate pur­pos­es” means the mon­ey is be­ing raised for an ac­qui­si­tion, the spokesper­son said, “The mon­ey is be­ing raised for mixed pur­pos­es in ser­vice of our 2X Strate­gic Plan growth projects.”

In the com­pa­ny’s 2022 an­nu­al re­port, ANSA McAL group chair­man, Nor­man Sab­ga said, “Your di­rec­tors re­main con­fi­dent in the Group’s abil­i­ty to be­come a $2 bil­lion prof­it com­pa­ny by 2027 ir­re­spec­tive of cur­rent glob­al un­cer­tain­ties.”

Asked why the group is look­ing to raise mon­ey at this time, when it has close to $8 bil­lion in re­serves, ANSA McAL said, “If by re­serves one means share­hold­ers’ eq­ui­ty, the an­swer is, that for a com­pa­ny with such low debt as ANSA, it is more cap­i­tal-ef­fi­cient to raise fund­ing now us­ing debt.

The group said its gear­ing ra­tio at last quar­ter close was un­der 7 per cent which is very low by in­dus­try stan­dards.

ANSA McAL is a con­glom­er­ate based in T&T, which op­er­ates through­out the re­gion and in North Amer­i­ca. The group is in­volved in au­to­mo­tive, bev­er­age, con­struc­tion, dis­tri­b­u­tion, fi­nan­cial ser­vices, man­u­fac­tur­ing, me­dia, re­al state, re­tail and ser­vices.