MARKET DEVELOPMENT
Sarawak Oil Palms to Buy SYOP For RM873Mil
Sarawak Oil Palms to Buy SYOP For RM873Mil
05/07/2016 (The Star) - Sawarak Oil Palms Bhd has proposed to acquire Shin Yang Oil Palm (Sarawak) Sdn Bhd (SYOP) from Shin Yang Holdings Sdn Bhd (SYHSB) for a total cash consideration of RM873mil.
“The company had entered into a conditional share sale agreement with SYHSB to acquire the entire equity interest in the issued and paid-up share capital of SYOP from the vendor for RM284.4mil and assume the inter-company balances owing by SYOP to Shin Yang Forestry Sdn Bhd, all for a total cash consideration of RM873mil,” it said in its filing with Bursa Malaysia yesterday.
Shin Yang Forestry is a wholly-owned subsidiary of SYHSB.
In relation to the proposed acquisition, Sarawak Oil has proposed to carry out renounceable right issue that would raise gross proceeds of approximately RM357.7mil to partly finance the takeover apart from bank borrowings and internally generated funds, said the company in its filing to Bursa Malaysia yesterday.
The “willing buyer willing seller” deal according to Sarawak Oil was based on the total market value of the land, oil palm estates and oil palm mill held by SYOP collectively amounting to RM906.1mil as at March 31.
“Additionally, the purchase consideration takes into account the sizeable land banks held by SYOP of approximately 47,000 ha, of which 23,798 ha of the lands have been fully planted and 6,772ha are plantable land areas,” it said.
On the rationale of the acquisition, Sarawak Oil said it is consistent with the company’s plans to continue to expand its oil palm cultivation business by acquiring new land banks in Sarawak.
Furthermore, SYOP has a fairly young crop profile, with young palms (four to 10 years of age) and prime palms (11 to 20 years of age) constituting approximately 72% of the total planted area.
“In addition, the proposed acquisition will expedite the group’s upstream expansion as the lands have been planted with some 6,716 hectares of immature palms (less than four years of age), in addition to the group’s existing 2,468 ha of immature palms.
“Upon completion of the proposed acquisition, the total land bank of the group will substantially increase by approximately 65% to 119,653ha, with planted hectares increasing by approximately 37% to 87,315ha,” it said.
On the rights issue, Sawarak Oil planned to undertake a renounceable rights issue of up to 127.8 million rights shares, on the basis of two rights shares for every seven existing Sarawak Oil shares.
The approximate gross proceeds of RM357.7mil, would be based on the indicative issue price of RM2.80 each for the rights share, representing a discount of approximately 93 sen or 24.93% based on the five-day volume-weighted average price of Sarawak Oil up to and including June 30 of RM3.98 per share.
“The company had entered into a conditional share sale agreement with SYHSB to acquire the entire equity interest in the issued and paid-up share capital of SYOP from the vendor for RM284.4mil and assume the inter-company balances owing by SYOP to Shin Yang Forestry Sdn Bhd, all for a total cash consideration of RM873mil,” it said in its filing with Bursa Malaysia yesterday.
Shin Yang Forestry is a wholly-owned subsidiary of SYHSB.
In relation to the proposed acquisition, Sarawak Oil has proposed to carry out renounceable right issue that would raise gross proceeds of approximately RM357.7mil to partly finance the takeover apart from bank borrowings and internally generated funds, said the company in its filing to Bursa Malaysia yesterday.
The “willing buyer willing seller” deal according to Sarawak Oil was based on the total market value of the land, oil palm estates and oil palm mill held by SYOP collectively amounting to RM906.1mil as at March 31.
“Additionally, the purchase consideration takes into account the sizeable land banks held by SYOP of approximately 47,000 ha, of which 23,798 ha of the lands have been fully planted and 6,772ha are plantable land areas,” it said.
On the rationale of the acquisition, Sarawak Oil said it is consistent with the company’s plans to continue to expand its oil palm cultivation business by acquiring new land banks in Sarawak.
Furthermore, SYOP has a fairly young crop profile, with young palms (four to 10 years of age) and prime palms (11 to 20 years of age) constituting approximately 72% of the total planted area.
“In addition, the proposed acquisition will expedite the group’s upstream expansion as the lands have been planted with some 6,716 hectares of immature palms (less than four years of age), in addition to the group’s existing 2,468 ha of immature palms.
“Upon completion of the proposed acquisition, the total land bank of the group will substantially increase by approximately 65% to 119,653ha, with planted hectares increasing by approximately 37% to 87,315ha,” it said.
On the rights issue, Sawarak Oil planned to undertake a renounceable rights issue of up to 127.8 million rights shares, on the basis of two rights shares for every seven existing Sarawak Oil shares.
The approximate gross proceeds of RM357.7mil, would be based on the indicative issue price of RM2.80 each for the rights share, representing a discount of approximately 93 sen or 24.93% based on the five-day volume-weighted average price of Sarawak Oil up to and including June 30 of RM3.98 per share.