PETALING JAYA: ELK-Desa Resources Bhd is establishing a Medium-Term Notes (MTN) programme of up to RM1 billion in nominal value via Premier Auto Assets Bhd.
The group said in a statement that it aims to utilise the fund to grow the hirer base of its used car hire purchase financing business.
“This exercise is in line with our capital management strategy to rely on borrowings to grow our hire purchase business in the near to medium term,” said ELK-Desa executive director and CFO Teoh Seng Hee.
He said the MTN programme provides a cost effective and a viable alternative source of financing.
“ELK-Desa’s gearing ratio remains at a low and manageable level of 0.28 times as at March 31. This provides our group with the flexibility to leverage up and tap into the debt capital market to raise funds.”
The tenure of the MTN Programme is 10 years and Premier Auto may periodically issue MTNs of various tenures, up to an aggregate limit of RM1 billion.
The first tranche of senior MTNs totalling RM105 million, comprising RM85 million of Class A MTNs rated AAA and RM20 million of Class B MTNs rated AA3, are scheduled to be issued on July 19.
ELK-Desa has appointed Hong Leong Investment Bank Bhd as its mandated principal adviser, lead arranger, lead manager and facility agent, while the rating agency is RAM Rating Services Bhd.