Tycoon Tanoto-Owned RGE Units Turn to Sustainable Financing

Tycoon Tanoto-Owned RGE Units Turn to Sustainable Financing

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(Bloomberg) — Two units of Singapore-based Royal Golden Eagle, owned by Indonesian tycoon Sukanto Tanoto, are in the midst of obtaining sustainability-linked loans as the group aims to shift its fundraising to environmentally-friendly options.

The firm’s palm oil unit, Apical Group, is in discussions with lenders for financing that comes with commitments from borrowers to meet certain environmental or social targets, according to a company spokesperson and people familiar with the matter. Meanwhile, its pulp and paper arm, Asia Pacific Resources International Ltd., recently signed a similar $1.5 billion-equivalent facility with 38 banks.

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Apical held a roadshow in Singapore on June 27, with banks from other regions dialing in, the company spokesperson said. Terms for the new syndicated financing are currently being finalized.

The latest borrowings follow a series of sustainability-linked loans raised by RGE since 2021, marking the group’s commitment to convert all its funding into such facilities, according to a January statement.

These ambitions come amid the ongoing scrutiny of Tanoto’s existing pulp and paper business, which spans factories in China to a plantation in Indonesia, due to environmental concerns. 

A May 2023 report from organizations including Greenpeace alleged RGE relied on deforestation in its supply chain, despite a commitment to end the practice. RGE denied the report, stating that all business groups operate in accordance with its sustainability framework, which includes an explicit ‘no deforestation’ policy. 

In January, RGE raised a $1 billion borrowing for Apical and another sustainable agribusiness unit Asian Agri, Bloomberg News reported earlier. That financing includes an inaugural sustainability-linked Islamic tranche of $150 million. 

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RGE, founded by Tanoto in 1973, and has grown into a global group of resource-based manufacturing businesses ranging from pulp and paper to energy. It has more than $35 billion in assets and 80,000 employees in Indonesia, Brazil, Canada, China and Spain, according to its website.

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