Kipco repays €200m medium term note

The two year floating rate note matured on November 27th, 2008 and was listed and traded on the London Stock Exchange. The issue was bought by a wide range of banks, fund managers and insurance companies in the Gulf, Europe and Asia.

The repayment of this EMTN bond follows Kipco's repayment on 12th November this year of a KD15m ($55m) bond. The company said its practical and preemptive approach to liability management has helped it meet maturing debt obligations without adversely impacting its cost of borrowing.

Kipco's leverage and debt service ratios remain well within the guidelines set by international credit rating agencies. As of 27th November, 2008, the company's net debt is well below the 25% maximum stated by Standard & Poors' in its last ratings report on Kipco. The company does not have to make any principal repayments until November 2009 and the average maturity of Kipco's debt is now 2.3 years. The company's multiple of cash to short-term debt is 5.3x.

Commenting on the EMTN repayment, Kipco's Executive Vice Chairman, Mr Faisal Al Ayyar, said:

"Kipco had prudent funding policies in place before economic circumstances made them necessary for everyone else. As a result, we have not faced the kind of liquidity problems the current financial crisis has inflicted upon many of the world's leading companies. This is because we have always focused on the long-term funding of our business. The average life of our debt is over two years whereas most of our surplus cash is invested for one month or less. By managing our affairs in such a conservative way and extending the maturity profile of our borrowings in good times, we are now reaping the benefits of our strategy to our advantage."

Kipco was one of the first private-sector companies in the Gulf region to tap the international capital markets through an EMTN programme. The programme enables the company to diversify its funding sources, reduce its cost of funds and extend the average life of its borrowings. In addition to this issue, Kipco has another $350m note under the programme due in April, 2011. The programme is still active and may be used by Kipco in the future when market conditions are favourable.