KUALA LUMPUR: TH Plantations Bhd’s proposal to sell its two plantation companies to Tamaco Plantation Sdn Bhd for RM170mil has been scuttled after the Economic Planning Unit (EPU) withdrew its consent.
In an announcement to Bursa Malaysia on Thursday, TH Plantations said it was informed by Tamaco that the EPU had withdrawn the approval in a letter dated Dec 4, one year after the sales and purchase agreement (SPA) was signed.
It also said the conditions imposed in the EPU approval were being annulled.
It should be noted that TH Plantations staged a turnaround in its financial results for the third quarter ended Sept 30,2020, riding on the strong crude palm oil (CPO) prices.
It posted net profit of RM15.77mil compared with a net loss of RM31.61mil a year ago.
The average selling price for CPO rose by 32.6% to RM2,540 per tonne while fresh fruit bunches rose by 46.3% to RM505.62 per tonne and palm kernel improved by 28.4% to RM1,419.61 per tonne.
The strong 3Q results helped to turn around the nine-month financial performance with net profit of RM12.39mil compared with the RM58.85mil net losses in the previous corresponding period.
Its cash and bank balances increased to RM80.29mil at end Sept this year compared with RM45.80mil a year ago.
To recap, on Dec 5 last year, TH Plantations had signed the SPA with Tamaco to dispose of its 100% stakes in Bumi Suria Ventures Sdn Bhd and Maju Warisanmas Sdn Bhd.
TH Plantations had then stated it was selling the plantation companies, which own 6,513 ha of oil palm plantation in Bintulu and Sibu for RM170mil.
It had then said the disposal was part of its rationalisation plan to revive its financial performance by divesting its assets to reduce borrowing and improve operational efficiency.
It cited the companies’ poor performance against the projecting production of fresh fruit bunches.
It also added that due to the current financial constraints, it was of the view that it was not in the position to continue with the plantation operations.
Upon completion of the disposal, TH Plantations expected to improve its gearing ratio from 1.09 times to 0.94 times and reduce its profit margin expenses by about RM9.41mil.
Post completion of the disposal, the THP Group would still own 94,462 ha of oil palm and rubber plantations.
Click below for the Dec 5, 2019 announcements to Bursa Malaysia: