MSM sells Ladang Chuping to F&N for RM156mil

KUALA LUMPUR: MSM Malaysia Holdings Bhd is selling 4,453 hectares of plantation land, known as Ladang Chuping in Perlis, to Fraser & Neave Holdings Bhd (F&N) for RM156mil cash.

The sugar producer said the proposed disposal is part of its asset rationalisation exercise and focus on sugar refining.

"With negligible revenue generating activities, it is less damaging to proceed with the disposal than to retain the land at high operating costs," it said in a filing with Bursa Malaysia today.

Meanwhile, F&N in a separate statement today, said it plans to develop a dairy farm on the acquired land.

MSM said on Tuesday that wholly owned subsidiary MSM Perlis Sdn Bhd has entered into a sale and purchase agreement with F&N Agrivalley Sdn Bhd for the disposal of nine parcels of leasehold land in Chuping.

The land is planted with palm oil, rubber and mango trees.

MSM said the original cost of investment for the land was RM99mil and the company has invested RM72mil from 2011 to 2019 for development of the land.

"The expected loss from the proposed disposal is RM1.76mil, computed based on net book value of RM157.76mil as at June 30, before deducting any expenses related to the proposed disposal," it said.

The land was valued at RM190mil based on the valuation ascribed by Raine & Horne International Zaki + Partners Sdn Bhd on Aug 20.

While the deal was priced at 18% discount to the land current of the market value, the company said the proposed disposal is in the best interest of the company and its subsidiaries after taking into account that the land was to be disposed since 2017 without success.

In a separate statement, F&N said the land was valued at RM150mil by an independent valuer, Henry Butcher Malaysia (Kedah) Sdn Bhd on Feb 12.

"The business intention for F&N AgriValley in acquiring this large contiguous land is to explore the upstream fresh milk business for downstream production and distribution of fresh milk," it said.

"The large contiguous land enables F&N to own a vertical integration on locally grown crop for feed to our dairy and in turn lowering the value chain cost per litre," it added.