Stephenson Harwood advises on first Shari’ah-compliant French tax lease sukuk issuance

Stephenson Harwood has advised on the first Shari’ah compliant sukuk issuance in the context of a French tax lease financing of an LNG carrier. The French company leasing the vessel under a KEXIM-backed French tax lease financing (the ‘Issuer’) issued sukuk notes in an aggregate principal amount of USD25 million (the ‘Notes’). The Notes were subscribed by a Kuwaiti bank (the ‘Note Purchasers’) subject to Shari’ah principles. The Issuer then applied the sums payable by the Note Purchasers to purchase commodities pursuant to a Murabaha Agreement to finance part of the purchase price of the vessel, which was being built at a Korean shipyard.

The Stephenson Harwood team advised KEXIM and the French tax lease lenders on the bond issuance in the context of a French tax lease financing that had had already closed and in the coordination of the two financing structures. This matter marks the first instance of an Islamic finance instrument used in conjunction with a French tax lease financing.

“As the first financing of its kind, this project required an innovative approach to ensure the success of the transaction,” said partner Alain Gautron, who led the Stephenson Harwood team. “We are seeing increased demand for Shari’ah compliant financing structures with a number of similar transactions forthcoming, and are well placed to advise our clients looking to explore these opportunities.”

The Stephenson Harwood team included Paris-based partners Alain Gautron and Ezio Dal Maso, who were supported by associate Chloé Chiss.