Unatrac to consider bond issuance

20 July 2014

Mansour Group-owned, Caterpillar equipment dealer Unatrac to turn to capital markets in coming years

The Dubai-headquartered Caterpillar equipment dealer Unatrac will consider tapping the debt markets within the next two years to fund its growth plans, Unatrac Holding Limited’s (UHL) CEO, Loutfy Mansour, tells MEED.

“After we have the right systems and processes in place, the plan would be to definitely tap the debt markets and do a bond issuance of some sort to diversify our borrowing base,” Mansour says. It would be at least 18-24 months before the issuance would take place, he adds.

He says the potential issuance will be a “sizable ticket”, needed to fund the company’s growth. The company currently has plans for $100m-worth of capex investment to be made over the next three years.

Unatrac is one of the world’s largest Caterpillar dealers, with exclusive dealership rights in eight countries in the Middle East, Africa and Russia. It is 100 per cent owned by Egypt’s Mansour Group, a family firm that has stakes in numerous industries, including being the sole operator of the US fast-food chain McDonalds in Egypt.

Mansour’s comments follow news at the end of June that UHL secured an extension and repricing of a $700m syndicated revolving credit facility originally signed in June last year.

The deal’s tenor has been extended to June 2018 from the original maturity date of June 2016. The facility has also been repriced at 2.75 per cent over the London interbank offered rate (Libor).

The UK’s Barclays Bank and Citi Group of the US were joint coordinators on the transaction. Several new banks joined the facility, with the deal winning strong support from Gulf banks.

The repricing of the facility is aimed at raising the profile of the company in the market and positioning it well to explore different funding options.  

Unatrac went through restructuring in 2011, which saw the company separate operations from its subsidiary Delta, which distributes non-Caterpillar construction and power systems.

The reorganisation also saw UHL relocate to the UAE and invest in a 40,000-square-metre logistics centre in the Jebel Ali free zone next to Dubai’s main international port. Its first year of operation under the new structure was in 2012.

Unatrac is expanding its operations across Africa and the Middle East, focusing on infrastructure projects to offset the slowdown in the global mining industry, which is a core sector for the company.

Egypt is becoming a more appealing market, Mansour says.

“Companies are hungry for investment,” he says, adding that several infrastructure projects, such as housing developments, are beginning to be tendered.

Nigeria’s infrastructure and power sector and Ghana’s mining sector are also attracting the attention of Unatrac and its partner company Mantrac Group. The company’s capital expenditure plans includes $25m investment in a facility in Ghana designed to support the mining industry.

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