MARKET DEVELOPMENT
Sime Darby's Proposed Acquisition Of NBPOL Unlikely To Affect Rating, Says Moody's
Sime Darby's Proposed Acquisition Of NBPOL Unlikely To Affect Rating, Says Moody's
08/08/2014 (Bernama) - Sime Darby Bhd's proposed purchase of New Britain Palm Oil Ltd (NBPOL) is unlikely to affect its A3 rating and stable outlook, says Moody's Investors Service.
"The addition of NBPOL's plantations will increase the scale and geographic diversity of Sime Darby's sizable plantation segment, widening its competitive advantage in the upstream plantations segment against the rest of the industry," Associate Analyst Dylan Yeo said in a Moody's statement here today.
Sime Darby is expected to utilise its existing cash balance of RM4.6 billion to fund the acquisition, and combined with continued tight control of its capital expenditure and disposal of non-core assets, will keep its leverage below Moody's downgrade threshold of 2.4-2.6 times.
On July 31, 2014, Kulim (Malaysia) Bhd, a subsidiary of Johor Corp, selected Sime Darby as the preferred party with which to negotiate a sale of its 48.97 per cent stake in NBPOL, a Papua New Guinea-based palm oil producer.
Sime Darby is the world's largest upstream crude palm oil producer with 527,259 hectares of oil palm.
The acquisition could increase its planted area by 15 per cent, as NBPOL owned 79,884 hectares of oil palm at end-2013, Moody's said.
"The addition of NBPOL's plantations will increase the scale and geographic diversity of Sime Darby's sizable plantation segment, widening its competitive advantage in the upstream plantations segment against the rest of the industry," Associate Analyst Dylan Yeo said in a Moody's statement here today.
Sime Darby is expected to utilise its existing cash balance of RM4.6 billion to fund the acquisition, and combined with continued tight control of its capital expenditure and disposal of non-core assets, will keep its leverage below Moody's downgrade threshold of 2.4-2.6 times.
On July 31, 2014, Kulim (Malaysia) Bhd, a subsidiary of Johor Corp, selected Sime Darby as the preferred party with which to negotiate a sale of its 48.97 per cent stake in NBPOL, a Papua New Guinea-based palm oil producer.
Sime Darby is the world's largest upstream crude palm oil producer with 527,259 hectares of oil palm.
The acquisition could increase its planted area by 15 per cent, as NBPOL owned 79,884 hectares of oil palm at end-2013, Moody's said.