05/10/2012 (The Star) - Kuala Lumpur Kepong Bhd is venturing into oil palm plantations in Papua New Guinea (PNG) by acquiring a 51% stake of Collingwood Plantations for US$8.66mil (RM26.86mil).

"The proposed acquisition presents an opportunity for KLK to develop new oil palm plantations in PNG in view of the increasing difficulty and expense to source suitable land in Malaysia and/or Indonesia," it said on Thursday.

KLK said following a preliminary feasibility study of the PNG site, it said although infrastructure and accessibility are currently difficult now and development costs high, "these disadvantages are counterbalanced by the fertile soil and friendly terrain of the PNG land".

KLK is acquiring the 51% stake comprising of 5,059 shares in Collingwood Plantations from a Malaysian, Hii Eii Sing.

In a separate statement, KLK's major shareholder Batu Kawan Bhd acquired an 18% stake in Collingwood Plantations from Hii for RM9.77mil.

This would see KLK and Batu Kawan controlling a 69% stake of Collingwood Plantations.

Collingwood Plantations' core activities are forestry, tug and barging services, and investment holdings. Its unit Ang Agro Forest Management Ltd has registered rights over several pieces of land in PNG.

Ang Agro has a 99-year state lease over 5,992 ha in the town in Oro Province, expiring in April 2110; a 49-year sublease over 21,520 ha of land in Northern Province, expiring in August 2061 and a 49-year sublease over 16,830 ha of land in Northern Province, expiring in August 2061.