itfc entices the private sector in sudan

3/1/2016 ITFC Entices the Private Sector in Sudan

http://www.itfcidb.org/en/print/content/itfcenticesprivatesectorsudan 1/4

Published on International Islamic Trade Finance Corporation (http://www.itfcidb.org)

ITFC Entices the Private Sector in SudanITFC has successfully tailormade Shariahcompliant solutions in order to meet the specificneeds of the client and to effectively compete in an aggressive market environment. In thisway, ITFC managed to harness a diversified portfolio with sugar as one of the majorcommodities. Taking business a step further, ITFC lent its support to the private sector inSudan, by financing a significant sugar deal, which helped in advancing the private sectorrole through a sustained commitment to improve access to valueadded and competitivefinancing.

ITFC was able to design the first CoFinanced Operation provided by the IDB Group to theprivate sector in Sudan. Under this Cofinancing, the ITFC as an arranger and a financier,and OPEC Fund for International Development (OFID) as a financier extended a MurabahaFinancing with the amount of US$50 million in favor of Kenana Sugar Company (KSC) inorder to import Raw & White Sugar from different sources worldwide.

In this deal structure, ITFC & OFID each contributed with the amount of US$25 million for thepurpose of using such contribution in the Murabaha Financing with KSC for purchasing Rawand White Sugar. The financing was granted to KSC on clean basis as the participants tookthe direct risk of KSC. However, a Debt Service Reserve Account (DSRA) held by a thirdparty was setup; the DSRA was designed in order to mitigate the Forex risk since the facilityis denominated in US Dollars while the repayment is in EURO.

By extending such financing to Sudan, ITFC supported the sugar manufacturing industry inorder to get Sudan recognized once again as the biggest and the only sugar exporter in theregion. ITFC has not only creatively designed this operation; it has supported, along with theother cofinancers, the biggest AgroIndustrial Company in the country, and by this, the Cofinanciers supported the Agricultural Sector (representing 27% of Sudan’s GDP) aswell as the Industrial Sector (representing 36% of Sudan’s GDP). ITFC believes that thisfinancing operation is a step forward on the way of its strategies to support and develop theeconomy of Sudan.

Deal Mechanics

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1. KSC concludes import transactions with its suppliers on behalf of ITFC as ITFC willbuy the Sugar from the supplier on spot and then sell it to KSC on differed basis.Kenana, through a local bank, issues a Nonoperative Letter of Credit in favor of theSupplier, a copy of this LC is sent to ITFC through authenticated means.

2. ITFC issues an Irrevocable Commitment to Reimburse (ICR) in favor of the Supplier,copies of this ICR are sent to the ITFC Paying Agent and the Issuing Bank.

3. The Advising bank advises the LC & the ICR to the Supplier.

4. The Supplier shipped the Sugar to the port of destination in Sudan and submittedthe required shipping documents to the Negotiating Bank.

5. When the documents are found in compliance with the LC terms and conditions, theNegotiating Bank will certify to the ITFC Paying Agent that the documents are foundin compliance through authenticated means, and send the documents to the IssuingBank.

6. The ITFC Paying Agent, as instructed in the ICR, will transfer the value of thedocuments to the Negotiation Bank. The resale price will be computed and a debitadvice will be given to Kenana.

7. KSC takes the delivery of the imported Sugar and on maturity date, Kenana willrepay ITFC the resale price.



Term Sheet

Instrument Murabaha CoFinancing

Obligor Kenana Sugar Company

Principal Activities Sugar Refining

Date of issue Aug. 25th, 2010

Issue size US$50 million

Tenor / Maturity Twelve months financing tenor

Coupon N/A

Repayment schedule Bullet Payments

Lead Arranger ITFC

Lead Manager ITFC

CoArrangers/Managers

OPEC Fund For International Development (OFID) asparticipant

Legal Counsel ITFC Legal

Financial Advisor nil



Guarantor nil

Trustee nil

Shariah Advisor In house

Method of issue Letters of Credit

Utilization of Proceeds To buy raw and white sugar

Ratings nil

Source URL: http://www.itfcidb.org/en/content/itfcenticesprivatesectorsudan

http://www.itfc-idb.org/en/content/itfc-entices-private-sector-sudan

itfc entices the private sector in sudan

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