Top Glove Corp Bhd's wholly -owned subsidiary, TG Excellence Bhd will accelerate its bond buyback program under sukuk worth RM3 billion.
The action was taken as a capital management measure and to balance the balance sheet of the world's largest rubber glove manufacturer in optimizing its capital position, as well as reducing financing costs.
According to Hong Leong Investment Bank Bhd's (HLIB) filing with Bank Negara Malaysia (BNM), TG Excellence had bought back and canceled bonds worth RM50 million in the past few days under the RM3 billion permanent sukuk program.
He explained that the bonds worth RM40 million were canceled on April 29 while the remaining RM10 million was on May 5.
Then another bond worth RM10 million will be canceled on May 13 following the notification of a repurchase transaction by the issuer.
Nonetheless, HLIB does not specify the duration or rate of permanent implant profitability by TG Excellence.
However, referring to Top Glove's statement dated 20 February 2020 on the permanent figure, it offers an annual profit rate of 3.95% with no valid maturity date.
Meanwhile, the company's filing to Bursa dated April 28 clarified the company's intention to buy back bonds following reports on the cancellation of bonds under TG Excellence's RM3 billion permanent scheme.
He argued that the permanent silhouette which was first issued in February 2020 was worth RM1.3 billion and its coupons were worth 3.95% per annum.
Based on the company's cash position and the capital management plan being implemented, they have purchased a nominal amount of permanent sukuk of RM40 million at a discount in the open market.
For now, Top Glove states that the company will continue to do so at the correct amount and price, as well as will proceed with the cancellation of permanent sukuk in accordance with the terms and conditions under the bond scheme.
