Puncak Niaga raises stake in oil palm plantation venture

Photoshoot for Palm Oil Pullout Cover at Carey Island. AZMAN GHANI / The Star

KUALA LUMPUR: Puncak Niaga Holdings Bhd, which is pursuing a joint venture (JV) in the oil palm plantation sector, is boosting its stake in the JV from 60% to 90%.

However, the sum it is required to contribute to the JV in buying an oil palm plantation business in Sarawak will fall to RM248.93mil from RM267.90mil. This is because the purchase price has been revised downwards under the second supplemental agreement inked on Monday.

In a filing with Bursa Malaysia, Puncak Niaga said its unit Murni Estate Sdn Bhd would own 90% equity interest in Danau Semesta Sdn Bhd (DSSB) instead of just 60% following the withdrawal of one of its two proposed JV partners.

At the same time, the oil palm firm that DSSB plans to acquire will have a lower price tag - RM276.59mil versus RM446.51mil previously - based on the revised value of the land it controls.

On Oct 17 last year, DSSB signed an agreement to buy the entire paid-up capital of Danum Sinar Sdn Bhd (the target firm) from Shin Yang Holding Sdn Bhd for RM446.51mil.

Danum Sinar is the registered proprietor and has “legitimate expectation from the Sarawak state government for the issuance of the provisional lease of certain parcels” of land totalling about 46,674ha in the state.

The purchase of Danum Sinar covers its estate office building, estate management and staff quarters, guest house, storage and other ancillary facilities relating to the oil palm plantation business.

However, the deal excludes, among others, species such as acacia and Albizia Falcata, all the timber and such species within the land, the timber concession and licenses, the gravel/stone/earth permit, and the Menawan wood mill.

The price of Danum Sinar’s land has been revised based the RM800mil market value of the land according to a May 26 valuation report by Puncak Niaga-appointed valuer VPC Alliance (Sarawak) Sdn Bhd.

The price of the 9,766.9ha planted portion has been cut to RM16,500 per acre from the original estimate of RM18,500 per acre, or to RM398.21mil in total.

For the 33,372.6ha unplanted portion, the price is now RM2,500 per acre (previously RM3,500) or RM206.16mil for the entire land based on the provisional lease.

The revised purchase price also takes into account the liabilities of Danum Sinar based on its management accounts as at March 31, which amounted to RM327.78mil.

As Puncak Niaga’s effective interest in DSSB (via Murni Estate) is 90%, the portion of the purchase price that it has to contribute for payment to the vendor of Danum Sinar is RM248.93mil.

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