Professional Documents
Culture Documents
Sukuk 2 PDF
Sukuk 2 PDF
Sukuk
holders
(8) Obligator make
periodic lease
payment to SPV
Federal Land
Obligator
as
Commissioner
seller
SPV
(7) Payments made
by SPV to Obligator
(6) Payments
received from
investors by SPV
Trust
Certificate
Issue
(5) Investors made
payments
Corporate
(4) Periodic profit +
incentive fee
Musharakah
Investors
(3) Periodic profit
SPV
(5) Issues sukuk
Musharakah +
periodic profit
Corporate and the Special Purpose Vehicle (SPV) enter into a Musharakah
Arrangement for a fixed period and agreed profit sharing ratio and the
appointment of the Corporate as an agent to develop the land. Any losses will
be apportioned based on the capital contributed. The corporate undertakes to
buy Musharakah shares of the SPV on a periodic basis.
1. Corporate (as Musharik A) contributes land or other physical assets to the
Musharakah
2 a & b. SPV (as Musharik B) contributes cash i.e. the issue Proceeds received
from the investors to the Musharakah
3. The Corporate as an agent of the Musyarakah to develop the land (or other
physical assets) with the cash injected into the Musharakah and sell/lease the
developed assets on behalf of the Musharik B.
4. In return, the agent (i.e. the Corporate) will get a fixed agency fee plus a
variable incentive fee payable.
5. The profits are distributed to the Sukuk holders.
6. The Corporate irrevocably undertakes to buy at a pre-agreed price the
Musharakah shares of the SPV on say semi-annual basis and at the end of
the fixed period the SPV would no longer have any shares in the
Musharakah.
Investor
Investor
Issuer
Trustee
Contruction of Project/
Contract or Undertaking the
Musyarakah Venture
4. The Trustee shall declare a trust over the Trust Asset and all rights under the
Musyarakah Venture for the benefits of the Musyarakah Partners.
Investors
Sukuk Proceeds
Sukuk
Cash Settlement
Purchase Right Deed
Issuer (XYZ)
Obligor
(Company A)
Purchase
Undertaking Deed
Sale Price
(Nominal)
Sale Price
(Nominal))
Company A
SPV (ABC)
Sale of Equity
Pool
1. Obligor (Company A) sells Shares (i.e. transfer of beneficial ownership) to ABC Ltd.
(a special purpose company) that in turn, sells the beneficial ownership of Shares to
XYZ Ltd. (a special purpose company) (Issuer).
2. The Issuer, issues the Exchangeable Trust Certificates (the Sukuk) which evidence
the beneficial ownership interests of Sukuk Holders in the Shares.
3. Company A enters into a Purchase Undertaking Deed with the Issuer, for the benefit
of the Sukuk Holders, whereby Company A undertakes to purchase the Shares from
the Issuer, upon occurrence of certain events at an agreed price.
4. Expected fixed Periodic Payments will be provided to Sukuk Holders in cash out of
the Dividends paid out by the Shares. Periodic payment is scheduled to be paid
semi-annually to the Sukuk Holders. The Periodic Payments, which are NOT
guaranteed by Company A, will be payable in arrears, subject to sufficient funds
being available from the dividend generated by the underlying pool of shares.
5. Any excess Dividends paid from the Shares, above the Periodic Payments, will be
accumulated in a Sinking Fund, up to an agreed amount. Once requisite funds have
been accumulated in the Sinking Funds, any excess Dividends up to a certain limit,
will be paid to Company A as fees, for services rendered
6. Upon maturity, the Issuer will exercise its option to sell the Exchange Property
(beneficial ownership) to Company A at the Scheduled Dissolution Amount, pursuant
to the Purchase Undertaking Deed issued by Company A Scheduled Dissolution
Amount to be defined as (Purchase price + agreed return to maturity) agreed upfront
between the Issuer and Company A at initiation stage.
Issuer
(XYZ Ltd)
Requests Equity
carve-out
Equity
corresponding to
sukuk
Equities/Cash
Offer to purchase
Exchange Property
Exchange
Agent
Obligor
Company A
7. Sukuk Holders have an Exchange Right i.e. right to take possession of the Shares
during an agreed period (the Exchange Period) before maturity of the Sukuk, and
cancel the Sukuk Certificate
8. Sukuk Holders issue unilateral irrevocable mandatory undertaking (the Cash
Settlement Purchase Right Deed) that gives Company A right of first refusal to
purchase the Exchange Property and make cash payment for the Exchange Property
upon exercise of the Exchange Right
9. Issuer appoints Exchange Agent. Upon request from Sukuk Holders during
Exchange Period, Exchange Agent will exercise Sukuk Holders Exchange Rights
10. Exchange Agent will:
Carve out Shares corresponding to the Certificates (Sukuk)
Cancel the Certificates and its corresponding rights
Offer the Shares to Company A (for exercise of its Purchase Right)
If Company A exercises the Purchase Right, Exchange Agent receives Cash
Settlement Purchase Price from Company A and forwards Cash Settlement
Purchase Price to Sukuk Holders, effectively allowing cash settlement by
Company A
If Company A does not exercise the right, Exchange Agent forwards the
Shares to Sukuk Holders
Exchange
Sukuk
holders
(1) Sukuk proceed
(5) SPV pays coupon
to investors.
(4a) Transfer
title to assets
End buyer
SPV
Contractor
(3) Payments made
by SPV