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Halcyon Agri outlines sustainability strategy; secures syndicated sustainability-linked loan of up to US$300 mil

·3-min read

On June 27, the group defined three initial SPTs that are said to be critical to its processing business globally.

In addition to its key priorities covering net zero carbon emissions, net-positive water impact, responsible sourcing and more in 2021, Halcyon Agri Corporation has now outlined its medium- to long-term sustainability strategy.

On June 27, the group defined three initial sustainability performance targets (SPTs) that are said to be critical to its processing business globally.

The SPTs will focus on energy efficiency (grid), water use intensity and traceable sourcing. According to Halcyon Agri, these SPTs are in line with the group’s goal to reduce its carbon footprint by transitioning to renewable energy sources and water conservation, while realising cost benefits.

“Furthermore, as part of our Sustainable Natural Rubber Supply Chain Policy, establishment of source provenance of our raw materials is essential in our no-deforestation commitment. Such initiative also provides some level of assurance to our customers as well as end users,” says the group via a filing posted on June 27.

Sustainability-linked loan of up to US$300 mil

At the same time, the group has secured a sustainability-linked loan of up to US$300 million ($415.7 million) from a banking syndicate.

The facility is supported by several financial institutions, UOB, China CITIC Bank International, Bank of Communications and Shanghai Pudong Development Bank Co.

In establishing the sustainability-linked loan, the company has refined the SPT parameters to cover the natural rubber processing business in Asia of HRC Group, a platform which serves the tyre majors globally.

The SPTs have been reviewed by Moody’s ESG (or environmental, social and governance) solutions, which has considered the facility to be aligned with the sustainability-linked loan principles 2022.

The proceeds from the facility will be deployed for working capital purposes of HRC Group’s natural rubber factories based in Asia, and to replace certain higher-interest loans.

The incentive mechanism will also allow the group to attain a lower cost of funding upon achieving certain conditions, in a rising interest rate environment.

Li Xuetao, Halcyon Agri’s chief executive officer (CEO) says, “We recognise that as one of the leading natural rubber players, both in terms of scale and presence, as well as sustainability track record, we need to actively take steps to decarbonise our supply chain and protect our environment.”

“The initial set of SPTs is an important step for rubber processing business, which is in need for modernisation, both from technology and sustainability perspective. We call on our fellow industry players to join us in this journey, and would welcome any productive engagements based on ESG principles,” he adds.

“We appreciate the tremendous support from leading financial institutions, and their recognition of our ongoing sustainability efforts. This puts the group in pole position ahead of future sustainability-linked financing opportunities,” says Jeremy Loh, Halcyon Agri’s chief financial officer (CFO).

“Sustainability being the core of Halcyon Agri’s business, we aim to link our principles with our actions, to continue investing in our sustainability capabilities, using green or sustainability-linked funding sources,” Loh adds.

As at 9.13am, shares in Halcyon Agri are trading flat at 21 cents.

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