PETALING JAYA: Genting Plantations Bhd’s (GenP) 73.68%-owned indirect subsidiary Palmindo Holdings Pte Ltd is acquiring the rights to develop 21,995ha of oil palm plantations in West Kalimantan from the Sepanjang group, GenP’s equity partner in Palmindo, for US$42.15mil (RM172.9mil) in cash.
In a filing with Bursa Malaysia, GenP said Palmindo had signed a conditional agreement with Sepanjang group’s unit Green Palm Capital Corp to buy the entire equity interest in Cahaya Agro Abadi Pte Ltd (CAA), whose 95%-owned subsidiary PT Agro Abadi Cemerlang has the rights to develop 8,095ha, for US$34.55mil (RM141.72mil).
It would also be buying a 100% equity interest in Palm Capital Investment Ltd (PCI), whose 95%-owned subsidiary PT Palma Agro Lestari Jaya has the rights to develop 13,900ha into an oil palm plantation, for US$7.6mil (RM31.18mil).
On completion of the proposed acquisitions, GenP will have an effective equity interest of 70% in both PT Agro Abadi Cemerlang and PT Palma Agro Lestari Jaya.
For the financial year ended Dec 31, 2015, CAA incurred an after-tax loss of US$15,355 and net liabilities of US$91,786. For the same period, PCI posted an after-tax loss of US$3,745 and net liabilities of US$3,744.
Palmindo will assume all outstanding liabilities, including Green Palm Capital’s loans to CAA and PCI, of the companies being acquired.
Of CAA’s 8,095ha, 3,877ha have already been planted and 1,601ha have a maturity profile of more than four years.
On the rationale for the proposed acquisitions, GenP said the two pieces of land were located within close proximity of GenP’s other landbank in West Kalimantan and presented potential synergies and economies of scale.
“The proposed acquisitions will increase GenP Group’s combined plantation landbank in Malaysia and Indonesia by 21,995ha from GenP, which has a plantation landbank of 238,376ha in Malaysia and Indonesia. The proposed deals would also expedite the group’s upstream expansion in Indonesia as some 3,127ha (under CAA’s Inti estate) had already been planted, thus raising its total planted area in Indonesia to 70,829ha.
“The proposed acquisitions represent a strategic investment by GenP, which is expected to contribute positively to the earnings as well as shareholders’ value of the company in the future,” the company said.