FELDA’S 33.4%-owned listed subsidiary, FGV Holdings Bhd, sees an urgent need to discuss the terms of the land lease agreement (LLA) with Felda.
The planter said in a statement that “this (LLA) matter has been raised repeatedly over the last three years, causing much uncertainty and concern for our shareholders”.
To recap, the LLA had paved the way for FGV to undertake its initial public offering exercise in June 2012.
Under the current terms of the LLA, FGV is required to pay a fixed lease payment of about RM250mil per year for 99 years, commencing from 2012.
The RM250mil is paid irrespective of prevailing crude palm oil (CPO) prices.
In 2012 when the LLA was negotiated, the average CPO price was RM2,843 per tonne. This compares with the current CPO price which is trading below RM2,100 per tonne.
Additionally, FGV has committed to pay Felda a 15% share of estate operating profits.
FGV also maintains that it has met all its obligations under the LLA.
However, the planter will be required to seek the approval of its shareholders for any proposed amendments to the LLA.
Meanwhile, FGV welcomes the government’s plans to revive Felda and its new commitment to alleviate the financial woes of Felda settlers.
It notes that the plan to diversify the income streams of settlers is a positive move and “FGV would be happy to participate in strategic discussions to seek viable solutions and explore potential synergies that will benefit all stakeholders”.
FGV, under its new management, is focused on its group-wide transformation plan which has started to show results.
The planter will be announcing its first-quarter 2019 financial results next month and is positive that all the measures implemented since October 2018 will set the company on the path to sustainable growth.
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