KLK buys Indonesian oil palm company
25.04.2018 (The Star Online) - KUALA LUMPUR: Kuala Lumpur Kepong Bhd
image: https://cdn.thestar.com.my/Themes/img/chart.png
(KLK) has agreed to buy a 95% stake in an Indonesian oil palm company with plantation in East Kalimantan for about RM300mil.
The proposed acquisition, KLK told Bursa Malaysia today, represents an opportunity for the group to acquire a company with brownfield oil palm plantation.
The target company, PT Putra Bongan Jaya (PBJ) was granted in 2009 the right to cultivate 11,602 hectares of land in Kalimantan Timur for a period of 35 years.
The right, KLK said, is generally renewable for a further period of 25 years.
PBJ has also obtained the location permit in the same area for an additional 4,460 hectares for oil palm plantation for a period of three years.
“PBJ’s plantations have been planted with oil palm since since 2009. It is projected that that approximately 7,500 hectares will be planted as at completion,” KLK said.
The deal values PBJ’s land and plantation at US$80mil (RM312mil).
The purchase consideration will be based on PBJ’s land and plantation value, to be adjusted on the company’s working capital and other balance sheet items.
KLK expects to complete the acquisition of PBJ by the third quarter of this year. It is buying the 95% stake in PBJ from London-listed REA Holdings plc.
“The disposal enables the group to release the intrinsic value that has built up in developing PBJ, which, as a recently planted property, has excellent potential but is not currently profitable,” REA said in a statement.
The company expects to realise a gross proceed of US$85mil and net proceeds of approximately US$57mil from the disposal.
REA said that should the area planted by PBJ fall short of the projected 7,482 hectares by Sept 30, the shortfall will result in a reduction of the value of the purchase price by US$8,000 per hectare.
The area currently planted by PBJ for its own use is estimated at 7,062 hectares.