Thai Union launches its first sustainability-linked loan package, priced at $400m
The world's largest seafood firm, Thai Union, has announced a new $400m loan package with interest payments linked to climate, sustainability and due diligence targets.
The package is split into two credit facilities, denominated in both Thai baht and US dollars. Both have five-year terms.
Interest payments on the loan will be linked to Thai Union’s progress in installing high-tech electronic monitoring systems or human observers on vessels in seafood supply chains, to protect worker rights and ensure that environmental data is properly collected.
They will also be linked to Thai Union’s ability to deliver against its targets to reduce greenhouse gas (GHG) emissions. Thai Union is in the process of developing new GHG reduction targets after meeting its 2020 ambition to reduce carbon intensity across the business by 30%, against a 2016 baseline.
To ensure that the loan is linked, in general, to the delivery of Thai Union’s broader SeaChange sustainability strategy targets, the business will also be required to maintain a high ranking in the Dow Jones Sustainability Index to benefit from better rates. Thai Union received a 99th percentile score for the global food sector in the 2020 edition of the Index.
All three sustainability “links” will be independently verified by Sustainalytics. Bank of Ayudha, Mizuho Bank and MUFG Bank have been appointed as sustainability coordinators and Mandated Lead Arrangers and Bookrunners.
Thai Union said in a statement that the loan package was twice oversubscribed, evidencing a growing interest in sustainability among investors.
“This, our first sustainability-linked loan, reaffirms our commitment to driving meaningful change not only in our own operations but in the industry as a whole,” the firm’s president and chief executive Thiraphong Chansiri said.
“The recognition from financial institutions of Thai Union’s sustainability initiatives is a testament to the hard work and success we have seen since the launch of SeaChange and demonstrates the growing, global focus on ethical business and investors’ desire to support companies that are truly seeking to make a difference.”
Green loan movement
The news from Thai Union comes shortly after Asian real estate giant City Developments Limited (CDL) confirmed a new green revolving credit facility totalling $470m that will be used to refinance it's the Republic Plaza commercial property and future low-carbon projects.
The five-year revolving credit facility (RCF) commenced last month and has been approved and provided by lenders including the Agricultural Bank of China, Credit Industriel et Commercial, DBS, HSBC, MUFG, Malayan Banking and SMBC. DBS and HSBC are the Green Loan Advisors for the green RCF.