Suu JSC completes repayment of 6 billion MNT bond
Suu JSC, one of the biggest dairy producers in the country, completed repayment of its six billion MNT bond raised on the Mongolian Stock Exchange (MSE). The tier-1 listed company, raised the largest debt offering on the market to date in June 29, 2017.
The Suu bond was backed by its shares and offered an annual interest rate of 17.5 percent. This helped attract public interest due to the high yield it offered while exemplifying to other companies and businesses the possibilities of cost-effective capital-raising, MSE said.
The bonds were actively traded on the secondary market of MSE, reaching a total turnover of 4.8 billion MNT. According to CEO of MSE, Kh.Altai, the bond helped improved the liquidity of Suu’s shares. Its shares surged 64 percent last year.
Orders for the bond surpassed 6.8 billion MNT with 67,547. Golomt Capital LLC worked as a leader underwriter with Tenger Capital LLC and Ard Capital LLC as co-underwriters.
The company concluded its cooperation agreement signed with MSE upon the full repayment of principle and coupon payments of Suu bond to the bondholder’s accounts. CEO of Suu JSC B.Gantulga and Kh.Altai signed the conclusion to the agreement.
“In the last two or three years, the losses the company experienced due to the fluctuations in the exchange rate were high in connection with a dollar loan from the International Financial Corporation (IFC). The company was experiencing losses of two to three billion MNT annually. With this tugrug bond, the company was able to pay off the six million USD syndicated loan before it was due. Last year, the company turned in a gross profit of 2.4 billion MNT,” said B.Gantulga.
According to B.Gantulga, the company has increased its annual revenue by 41 percent after the issuance of the Suu Bond. He added that it is possible to further increase revenue as the company is adopting new packaging machinery and equipment. In addition, Suu is planning to supply new dairy products into the market in December, including less fatty yoghurt and milk beverages.
The company distributed dividends to its 1,400 shareholders after its successful year in 2017. Moving forward, CEO B.Gantulga has expressed that the company will prioritize providing shares in the company to its employees.
“For the first time on MSE, a bond valued at six billion MNT was issued and now successfully repaid. I hope that other companies learn from the experience of Suu JSC. Cabinet has stopped the issuance of government bonds on MSE. I want to encourage companies to use the stock exchange as a way to fund their business expansion,” said Director of Ard Capital B.Ulziibayar.