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Sabana Sukuk Pte Ltd SD 100,000,000 4.25% 3-Apr-2019 - Pricing Supplement

IB Insights
By IB Insights
4 years ago
Sabana Sukuk Pte Ltd SD 100,000,000 4.25% 3-Apr-2019 - Pricing Supplement

Ard, Islam, Sukuk , Provision


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  1. Pricing Supplement dated 29 September 2014 Sabana Sukuk Pte . Ltd. Issue of S$100,000,000 4.25 Per Cent. Fixed Periodic Distribution Trust Certificates due 2019 under the S$500,000,000 Multicurrency Islamic Trust Certificates Issuance Programme arranged by CIMB Bank Berhad Where any amount is derived from any Trust Certificates by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available for qualifying debt securities (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the “Income Tax Act”) shall not apply if such person acquires such Trust Certificates using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose amount derived from the Trust Certificates is not exempt from tax (including for the reasons described above) shall include such amount in a return of income made under the Income Tax Act. This document constitutes the Pricing Supplement relating to the issue of Trust Certificates described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Information Memorandum dated 16 April 2013. This Pricing Supplement constitutes the pricing supplement of the Trust Certificates and must be read in conjunction with such Information Memorandum 1 (i) Issuer: Sabana Sukuk Pte. Ltd. (ii) Obligor: HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Sabana Shari’ah Compliant Industrial Real Estate Investment Trust) 2 Series Number: 002 3 Specified Currency: Singapore Dollars 4 Nominal Value of Series: S$100,000,000 5 Issue Price: 100.0 per cent. of the Nominal Value 6 Specified Denominations: S$250,000 7 (i) Closing Date: 3 October 2014 (ii) Return Accumulation Commencement Date: Closing Date 8 Scheduled Dissolution Date: 3 April 2019 9 Expected Periodic Distribution Basis: 4.25 per cent. Fixed Periodic Distribution
  2. 10 Dissolution Basis : Dissolution at par 11 Change of Expected Periodic Distribution Basis: Not Applicable 12 Status: The Trust Certificates constitute an undivided beneficial ownership interest in the relevant Trust Assets and shall rank pari passu without any preference or priority with all other Trust Certificates of the same Series from time to time outstanding 13 Method of distribution: Syndicated PROVISIONS RELATING TO DISTRIBUTIONS (IF ANY) PAYABLE 14 Fixed Periodic Distribution Provisions: Applicable (i) Expected Periodic Distribution Rate: 4.25 per cent. per annum payable semiannually in arrear (ii) Periodic Distribution Date(s): 3 April and 3 October in each year, commencing on 3 April 2015, up to and including the Scheduled Dissolution Date (iii) Fixed Amount[(s)]: Not Applicable (iv) Broken Amount(s): Not Applicable (v) Day Count Fraction Actual/365 (Fixed) (vi) Determination Date(s): Not Applicable (vii) Other terms relating to the method of calculating Fixed Periodic Distributions: Not Applicable 15 Floating Provisions: Periodic Distribution Not Applicable 16 Variable Provisions: Periodic Distribution Not Applicable 17 Zero Periodic Distribution Provisions: Not Applicable PROVISIONS RELATING TO DISSOLUTION 18 (i) Dissolution Distribution Amount: An amount equal to the Aggregate Nominal Value plus any accrued but unpaid Periodic Distribution Amounts (if any)
  3. (ii) Method of calculating the Dissolution Distribution Amount (if other than as set out in the Conditions): (iii) Method of calculating the Early Dissolution Amount (if other than as set out in the Conditions): Not Applicable Not Applicable 19 Dissolution for Tax Reasons Applicable 20 Optional Dissolution (Call) Not Applicable 21 Dissolution (Put) Not Applicable GENERAL PROVISIONS APPLICABLE TO THE TRUST CERTIFICATES 22 Form of Trust Certificates: Trust Certificates represented by a Global Certificate in registered form exchangeable for Trust Certificates in definitive registered form in the limited circumstances specified in the Global Certificate 23 Business Centre(s): Not Applicable 24 Amount of beneficial ownership of Shari’ah compliant Real Estate to be purchased: S$42,000,000 (being 35.3 per cent. of the Deferred Sale Price, where the Deferred Sale Price is an amount equal to S$119,125,000) 25 Amount of the Series Proceeds which shall be invested in the Commodity Murabahah Investment: S$100,000,000.00 (being 100 per cent. of the Series Proceeds) 26 Other terms or special conditions: Not Applicable DISTRIBUTION 27 (i) If syndicated, names of Dealers: The Hongkong and Shanghai Banking Corporation Limited Maybank Kim Eng Securities Pte. Ltd. United Overseas Bank Limited (ii) Date of Subscription Agreement: 29 September 2014 28 If non-syndicated, name of Dealer: Not Applicable 29 Additional selling restrictions: Not Applicable
  4. OPERATIONAL INFORMATION 30 ISIN Code : 31 Common Code: Not Applicable 32 Any clearing system(s) other than the Depository, Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme and the relevant identification number(s): Not Applicable. The Trust Certificates will be cleared through The Central Depository (Pte) Limited. 33 Delivery: Delivery free of payment 34 Additional Paying Agent(s) (if any): Not Applicable
  5. ANNEX 1 SUPPLEMENTARY INFORMATION RELATING TO THE ISSUER ’S BUSINESS AND OPERATIONS The announcements made by Sabana Shari’ah Compliant Industrial Real Estate Investment Trust on 3 May 2013, 21 June 2013, 22 August 2013, 23 August 2013, 13 September 2013, 19 September 2013, 24 September 2013, 26 September 2013, 17 October 2013, 12 November 2013, 4 February 2014, 10 March 2014, 17 March 2014, 19 March 2014, 1 April 2014 and 22 August 2014 as published on the website of the Singapore Exchange Securities Trading Limited are hereby incorporated by reference. In addition, the following shall be deemed to be included in the section “Investment Considerations” from pages 143 to 164 of the Information Memorandum dated 16 April 2013: “JTC has announced that all assignment of new leases from JTC will have a minimum leaseback period of five years if the remaining lease has a duration of 30 years or less and a minimum leaseback period of ten years if the remaining lease has a duration of more than 30 years. In order to facilitate overall land use planning and development needs in Singapore, JTC had recently announced that with effect from 15 November 2013, all assignment or transfer of new leases from the assignor or transferor (as vendor or seller) to the assignee or transferee (as purchaser) will be subject to a minimum leaseback period (the “Minimum Leaseback”) of five years if the remaining land tenure has a duration of 30 years or less and a Minimum Leaseback period of ten years if the remaining land tenure has a duration of more than 30 years. According to the announcement, the reason behind this policy is that this ensures that the vendors or sellers who have leased industrial land based on their proposed business plans remain committed to them for a sustained and reasonable period of time, while allowing the vendors or sellers to exit on grounds of genuine business needs. As this policy from JTC is new, while it may not have an impact on its existing properties, it could result in fewer attractive acquisition opportunities for Sabana REIT. JTC has announced a revised subletting policy which states that third party facility providers can only sublet up to 50% of the building’s gross floor area (“GFA”) to non-anchor tenants within 5 years after obtaining Temporary Occupation Permit (“TOP”), and up to 30% thereafter. JTC has recently announced that with effect from 1 October 2014, third party facility providers such as REITs can only sublet up to 50% of GFA to non-anchor tenants within 5 years after obtaining TOP, and thereafter, can only sublet up to 30% of GFA to non-anchor tenants and at least 70% of GFA to anchor tenants. As this policy from JTC is new, while it may not have an impact on its existing leases, it could result in more vacant space at JTC properties of Sabana REIT in view that under the revised policy, after 5 years from obtaining TOP, Sabana REIT is required to lease out at least 70% of GFA to anchor tenants which must satisfy JTC’s assessment of value-added, remuneration per worker and skilled worker profile, with each anchor tenant being required to occupy a GFA of at least 1,500 square metres.”
  6. ANNEX 2 The section “Singapore Taxation” from pages 168 to 170 of the Information Memorandum dated 16 April 2013 shall be deleted in its entirety and substituted with the following: “SINGAPORE TAXATION The statements below regarding Singapore taxation are general in nature and are based on certain aspects of the tax laws of Singapore and administrative guidelines and circulars issued by the relevant authorities in force as of the date of this Information Memorandum and are subject to any changes in such laws, administrative guidelines or circulars, or the interpretation of those laws, guidelines or circulars, occurring after such date, which changes could be made on a retroactive basis. These laws, guidelines and circulars are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. Neither these statements nor any other statements in this Information Memorandum are intended or are to be regarded as advice on the tax position of any Trust Certificates Holder or of any person acquiring, selling, or otherwise dealing with the Trust Certificates or on any tax implications arising from the acquisition, sale or other dealings in respect of the Trust Certificates. The statements made herein do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Trust Certificates and do not purport to deal with the tax consequences applicable to all categories of Trust Certificates Holders, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates. Prospective Trust Certificates Holders are advised to consult their own tax advisors as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of the Trust Certificates, including, in particular, the effect of any foreign, state or local tax laws to which they are subject. It is emphasised that none of the Issuer, the Arranger and any other persons involved in the Programme accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Trust Certificates. 1. Periodic Distribution Amounts under the Trust Certificates Subject to the following paragraphs, under Section 12(6) of the Income Tax Act, Chapter 134 of Singapore (the “ITA”), the following payments are deemed to be derived from Singapore: (a) any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or (b) any income derived from loans where the funds provided by such loans are brought into or used in Singapore. Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the 15 per cent. final withholding tax described below) to non-resident persons (other than non-resident individuals) is currently 17 per cent. The applicable rate for non-resident individuals is currently 20 per cent. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15 per cent. The rate of 15 per cent. may be reduced by applicable tax treaties.
  7. Certain Singapore-sourced investment income derived by individuals from financial instruments (including any amount payable from Islamic debt securities on or after 1 January 2005) is exempt from tax, provided such income is not derived by individuals through a partnership in Singapore and is not considered as gains or profits from the carrying on of any trade, business or profession. Section 43N(4) of the ITA defines the term “Islamic debt securities” to mean debt securities and trust certificates (where such trust certificates are certificates evidencing beneficial ownership in the underlying assets): (a) which are endorsed by any Shari’ah council or body, or by any committee formed for the purpose of providing guidance on compliance with Shari’ah law; and (b) the amounts payable from such securities and trust certificates are periodic and supported by a regular stream of receipts from underlying assets. On the basis that the Trust Certificates are regarded as “Islamic debt securities” under Section 43N(4) of the ITA and the Programme as a whole was arranged by CIMB Bank Berhad, acting through its Singapore Branch, which was a Financial Sector Incentive (Bond Market) Company (as defined in the ITA) at such time, any tranche of the Trust Certificates (“Relevant Trust Certificates”) issued as Islamic debt securities under the Programme during the period from the date of this Information Memorandum to 31 December 2018 would be, pursuant to the ITA and the MAS Circular FSD Cir 02/2013 entitled “Extension and Refinement of Tax Concessions for Pormoting the Debt Market” issued by the MAS on 28 June 2013, qualifying debt securities (“QDS”) for the purposes of the ITA, to which the following treatment shall apply: (a) subject to certain prescribed conditions having been fulfilled (including the furnishing of a return on debt securities in respect of the Relevant Trust Certificates in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with such Relevant Trust Certificates as the relevant authorities may require to the MAS and such other relevant authorities as may be prescribed and the inclusion by the Issuer in all offering documents relating to the Relevant Trust Certificates of a statement to the effect that where any amount from the Relevant Trust Certificates is payable to any person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person acquires the Relevant Trust Certificates using funds from that person’s operations through the Singapore permanent establishment), the Periodic Distribution Amounts payable by the Issuer in respect of the Relevant Trust Certificates which are derived by a holder who is not resident in Singapore and who (aa) does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire such Relevant Trust Certificates are not obtained from such person’s operation through a permanent establishment in Singapore, are exempt from Singapore tax; (b) subject to certain conditions having been fulfilled (including the furnishing of a return on debt securities in respect of the Relevant Trust Certificates in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with such Relevant Trust Certificates as the relevant authorities may require to the MAS and such other relevant authorities as may be prescribed), the Periodic Distribution Amounts payable by the Issuer in respect of the Relevant Trust Certificates and derived by any company or body of persons (as defined in the ITA) in Singapore is subject to income tax at a concessionary rate of 10 per cent. (except for holders of the relevant Financial Sector Incentive(s) who may be taxed at different rates); and (c) subject to: (i) the Issuer including in all offering documents relating to the Relevant Trust Certificates a statement to the effect that any person to whom an amount from such Relevant Trust Certificates is payable shall, where such amount is not exempt from tax, include such amount in a return of income made under the ITA; and
  8. (ii) the furnishing to the MAS and such other relevant authorities as may be prescribed of a return on debt securities in respect of the Relevant Trust Certificates in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with such Relevant Trust Certificates as the relevant authorities may require, the Periodic Distribution Amounts payable by the Issuer in respect of the Relevant Trust Certificates are not subject to withholding of tax by the Issuer. Notwithstanding the foregoing: (a) if during the primary launch of any tranche of the Relevant Trust Certificates, such Relevant Trust Certificates are issued to fewer than four persons and 50 per cent. or more of the principal amount of such Relevant Trust Certificates is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such Relevant Trust Certificates would not qualify as QDS; and (b) even though a particular tranche of the Relevant Trust Certificates are QDS, if, at any time during the tenure of such Relevant Trust Certificates, 50 per cent. or more of the principal amount of such Relevant Trust Certificates is held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, the Periodic Distribution Amounts derived from such Relevant Trust Certificates held by: (i) any related party of the Issuer; or (ii) any other person where the funds used by such person to acquire such Relevant Trust Certificates are obtained, directly or indirectly, from any related party of the Issuer, shall not be eligible for the tax exemption or concessionary rate of tax described above. The term “related party”, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person. Where any amount is derived from any Relevant Trust Certificates by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available for QDS under the ITA (as mentioned above) shall not apply if such person acquires such Relevant Trust Certificates using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person to whom the Periodic Distribution Amounts or any other amounts from the Relevant Trust Certificates is payable shall, where such amounts are not exempt from tax, include such income in a return of income made under the ITA. 2. Capital Gains Any gains considered to be in the nature of capital made from the sale of the Trust Certificates will not be subject to tax in Singapore. However, any gains derived by any person from the sale of the Trust Certificates which are gains from any trade, business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be taxable as such gains are considered revenue in nature. Trust Certificates Holders who apply or who are required to apply Singapore Financial Reporting Standard 39 - Financial Instruments: Recognition and Measurement (“FRS 39”) may for Singapore income tax purposes be required to recognise gains or losses (not being gains or losses in the nature of capital) on the Trust Certificates, irrespective of disposal, in accordance with FRS 39. Please see the section below on “Adoption of FRS 39 Treatment for Singapore Income Tax Purposes”. 3. Adoption of FRS 39 Treatment for Singapore Income Tax Purposes
  9. The Inland Revenue Authority of Singapore has issued a circular entitled “Income Tax Implications Arising from the Adoption of FRS 39 - Financial Instruments: Recognition and Measurement” (“FRS 39 Circular”). The ITA has since been amended to give effect to the FRS 39 Circular. The FRS 39 Circular generally applies, subject to certain “opt-out” provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes. Trust Certificates Holders who may be subject to the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Trust Certificates. 4. Estate Duty Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February 2008.”