KUALA LUMPUR: Subsidiaries of FGV Holdings Bhd (FGV), MSM Malaysia Holdings Bhd (MSM) and FGV Integrated Farming Holdings Sdn Bhd (FGVIF) have entered into a binding term sheet on the respective disposal and acquisition of 100 per cent stake of MSM's wholly-owned subsidiary, MSM Perlis Sdn Bhd.
With an initial disposal consideration of RM175 million, the agreement is set to be completed by the third quarter of this year.
The proposed disposal is following the discontinuation of non-strategic operations in MSM Perlis as part of MSM’s rationalisation strategies to streamline profitability and develop operational capability, FGV and MSM said in a joint statement today.
MSM Perlis holds 11 parcels of agricultural and industrial land that have been earmarked for the development of the FGV Chuping Agro Valley (FCAV) in Perlis by FGVIF, a new sector under the group.
The development comprised integrated high-value cash crop plantation activities and an expanding dairy farming business.
FGV group chief executive officer Datuk Haris Fadzilah Hassan said the acquisition will potentially bolster the economic sector of Perlis as well as provide various employment opportunities to the locals.
"The FCAV project will redefine the local agricultural industry landscape as it adapts Agriculture Revolution 4.0 approaches, incorporating modern technologies and mechanisms, sustainable development and value-added activities.
"The project will also serve as a location for investment and entrepreneurship, and trigger downstream industries for various agro products to contribute towards food security for the country,” he said.
MSM group chief executive officer Syed Feizal Syed Mohammad said the closure of MSM Perlis has enhanced its operational front particularly in the aspect of utilisation rate and yield improvement in MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor).
"The disposal of MSM Perlis is part of MSM’s blueprint in monetising non-core assets to reduce further borrowings and improve gearing, strengthen cash flows, fund capital and operational expenditures.
"An extraordinary income will also be realised as part of the proposed disposal with an estimated gain of RM91.6 million,” said Syed Feizal.
He said since the cessation of sugar cane plantation in 2011, MSM Perlis continued to manage the agricultural land with rubber, oil palm and mango plantation.
However, due to unsustainable performance associated with high operating costs of maintaining plantation activities, MSM Perlis ceased its plantation sector activities on June 30, 2019.
Meanwhile, its sugar refinery operations were discontinued a year later following MSM’s capacity rationalisation to consolidate the production in the new refinery, MSM Johor. - Bernama