Ras Al Khaimah completes offers for two series of trust certificates

By Susanna Moon

Chicago, Dec. 8 - The Government of the Emirate of Ras Al Khaimah said it accepted $251,981,000 of trust certificates due 2012 issued by Rakia Sukuk Co. Ltd. in the tender offer for the notes and $7.5 million of the certificates in the concurrent exchange offer.

Investors also tendered AED 713 million of trust certificates due 2013 issued by RAK Capital.

The government announced tender and exchange offers for the $325 million of 2012 trust certificates and a tender offer for the AED 713 million of 2013 trust certificates through its Investment and Development Office on Nov. 22.

The offers ended at 6 a.m. ET on Dec. 6 and will settle on Dec. 15.

Rakia Sukuk also solicited consents from the holders of the 2012 certificates to pass an extraordinary resolution that would allow the Ras Al Khaimah Investment Authority to redeem the 2012 certificates at par.

The measure passed at a meeting held on Dec. 8.

Holders had tendered more than 75% of 2012 trust certificates by the early tender deadline of 11 a.m. ET on Nov. 30.

The benchmark security used to determine the periodic distribution rate and the new issue yield for the new certificates was the 1.375% U.S. Treasury note due November 2015, and the minimum new issue spread was 315 basis points.

The exact pricing of the new certificates was to be determined at 9 a.m. ET on Dec. 8.

The purchase price for the 2013 certificates has been set at AED 101,000 per AED 100,000 of certificates.

As previously reported, the maturity date of the new certificates to be issued in the exchange offer is expected to be Jan. 28, 2016.

The office offered par in cash for the 2012 certificates. Holders who tendered by the early tender deadline will also receive an early tender premium of $20.00 per $1,000 principal amount of certificates.

Alternatively, holders could offer to exchange their 2012 certificates for new dollar-denominated trust certificates due in the first quarter of 2016.

The exchange ratio was 1.02 for 2012 certificates tendered by the early tender deadline and 1.00 for those tendered after the early deadline.

The maximum amount of 2012 certificates to be accepted for exchange was $150 million. If the amount of certificates tendered for exchange exceeded this amount, the certificates would be exchanged on a pro rata basis, and any certificates not accepted for exchange due to proration would have instead been included in the tender offer.

In order to participate in the exchange offer, holders had to tender enough 2012 certificates to result in the issuance of at least $100,000 principal amount of new certificates.

Certificate holders will also receive accrued distributions.

Holders had to tender at least $100,000 of 2012 certificates or at least AED 500,000 of 2013 certificates in order to participate in the offers.

Holders of the 2012 certificates who were ineligible to participate in the offers could participate in the consent solicitation. Those who delivered consents will receive $20.00 for each $1,000 principal amount of certificates.

The new trust certificates will be issued by RAK Capital and will be listed on the London Stock Exchange.

The spread used to set the periodic distribution rate was to be determined by a bookbuilding process. The completion of the exchange offer was conditioned on the dealer managers receiving commitments to subscribe for at least $150 million principal amount of the new certificates.

The emirate said the reason for the offers and the consent solicitation was to use some surplus cash resources to extend the maturity profile of its debt and to consolidate its sovereign issuance within RAK Capital as the issuing entity.

The offers were not being made in the United States or Italy.

The dealer managers were Citigroup Global Markets Ltd. (+44 0 207 986 8969) and Royal Bank of Scotland plc (+ 44 0 207 085 8056). The co-manager was Samba Capital & Investment Management Co. (+966 1 211 7416).

The tender and exchange agent was Citibank, NA (+44 0 207 508 3867).

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