Dar Al Arkan to redeem $400 mln sukuk

Saudi  Arabia’s Dar Al Arkan Real Estate Development Company, will redeem its $400 million (SAR 1.5 billion) 2019 sukuk by using internal cash reserves, the developer said in a statement on Sunday.

The sukuk, listed on Irish Stock Exchange and NASDAQ Dubai, is  due to mature on May 28, 2019.

“Dar Al Arkan, is in an enviable liquidity position at present, with cash and cash equivalents near SAR 5 billion, we plan to redeem the coming 2019 redemption out of cash reserves. Given the health of the business and our strong free cash flow conversion expectations, we see no immediate need to issue any new sukuks for the foreseeable future,” said Andy Raheja, CFO of Dar Al Arkan.

The $400 million sukuk was issued on May 27, 2014 was the seventh such issue by Dar Al Arkan. Over the last decade, the company has issued nine international sukuks and post redemption of 2019 sukuk it will continue to have $ 1 billion (SAR 3.75 billion) of sukuks, divided equally over the 2022 and 2023 maturities.

“We see our decision to pay down debt from cash reserves as a sign of confidence in our current strategy and belief in our ability to meet our commitments through operating cash flows. We expect our debt investors to see this redemption positively,” Raheja said.