Ras Al Khaimah prices certificates to be issued in exchange offer

By Angela McDaniels

Tacoma, Wash., Dec. 9 - The Government of the Emirate of Ras Al Khaimah set the final terms of the new trust certificates to be issued in the exchange offer for the $325 million of trust certificates due 2012 issued by Rakia Sukuk Co. Ltd.

The new trust certificates will mature on Jan. 28, 2016, the periodic distribution rate is 5.3292%, and the total amount of trust certificates to be issued is $400 million, according to a government news release.

The benchmark security used to determine the periodic distribution rate was the 1 3/8% U.S. Treasury note due November 2015, and the minimum new issue spread was 315 basis points. Pricing was set at 9 a.m. ET on Dec. 8.

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's Investment and Development Office began tender and exchange offers for the 2012 trust certificates and a tender offer for the AED 1 billion trust certificates due 2013 issued by RAK Capital on Nov. 22. They ended at 6 a.m. ET on Dec. 6 and will settle on Dec. 15.

As previously reported, holders tendered $251,981,000 of 2012 trust certificates for cash, $7.5 million of 2012 trust certificates for exchange and AED 713 million of 2013 trust certificates for cash.

The exchange ratio is 1.02 for 2012 trust certificates tendered by the early tender deadline, which was 11 a.m. ET on Nov. 30, and 1.00 for those tendered after the early deadline.

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 per $1,000 principal amount of trust certificates.

The purchase price for the 2013 certificates is AED 101,000 per AED 100,000 of certificates.

Certificate holders will also receive accrued distributions.

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.

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 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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