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OCP Group's Strategic Move: Securing 5 Billion MAD through Perpetual Subordinated Bond Issue

OCP Group's Strategic Move: Securing 5 Billion MAD through Perpetual Subordinated Bond Issue
Saturday 02 December 2023 - 12:00
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In a strategic move to fortify its financial structure, OCP Group, the giant phosphate producer, has obtained approval from the Moroccan Capital Market Authority (AMMC) for a perpetual subordinated bond issuance. This issuance, valued at 5 billion Moroccan Dirhams (MAD), includes options for early repayment and deferred interest payments. The subscription period is set to commence on December 7 and conclude on December 11.

Diversifying Capital Structure for Growth:
The subscription is exclusively reserved for qualified Moroccan investors, with restrictions barring participation from the United States and U.S. residents. CDG Capital and Attijariwafa bank Corporate Finance are the advisory bodies overseeing the operation, with both entities also responsible for placement. This strategic move aligns with OCP Group's broader agenda of strengthening its capital structure, diversifying funding sources, and supporting its growth strategy. The latter is centered on enhancing industrial capacity and achieving energy transition goals.

Green Investment Program and Financial Backing:
As part of its development program to solidify its leadership position, OCP Group has initiated a $13 billion green investment plan spanning from 2023 to 2027. The primary objective is to increase mining extraction and fertilizer production capacity, with a commitment to achieving carbon neutrality by 2040. To fund a portion of this ambitious program, OCP has opted for this national perpetual subordinated bond issuance.

"This approach is part of a strategy to optimize access to capital markets and diversify funding sources," highlights the group. Utilizing perpetual subordinated bonds enables the issuer to strengthen its financial structure, treating it as equity in International Financial Reporting Standards (IFRS) and by rating agencies, subject to compliance with their specified conditions.

Maintaining Financial Resilience:
In order to preserve the perpetual bonds within the permanent part of its capital structure, OCP intends to finance any repayment through the issuance of equity securities. These securities may either be shares or securities pari passu with the current issuance, ensuring a capital content at least equivalent to the redeemed securities.

This financial move reflects OCP Group's commitment to a sustainable and resilient financial future, aligning with its broader goals of environmental responsibility and growth in the global phosphate industry. With the subscription period on the horizon, investors and industry observers are keen to witness the outcome of this strategic financial maneuver by one of Morocco's key players in the international market.


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