KUMPULAN Guthrie Bhd's proposal to sell some of its land in Malaysia topay for recent acquisitions in Indonesia could help reduce the company'sgearing level, analysts say.

The company's gearing ratio currently stands at slightly more than one,with shareholders' funds of about RM2 billion.

"Guthrie's venture into Indonesia was very brave indeed, but it has alsocaused the company to be heavily indebted," a plantation analyst toldBusiness Times in Kuala Lumpur last Friday.

"Although their Indonesian investment is very strategic for the long term,for survival the group needs to convert some of its assets into cash," hesaid.

Last Friday, Guthrie's executive director for finance and corporateservices Ghazali Awang said the group intends to sell more than 1,000ha ofits land in Malaysia to finance its recent acquisitions in Indonesia.

The sale, which would be done in stages, could raise around RM700 millionto RM900 million in proceeds, he said.

For starters, the group hopes to sell over 404.68ha of its land in theKlang Valley which would bring in some RM500 million for the company.

"We are now in talks with potential buyers.

Hopefully, the deal can be completed by this year-end," Ghazali said inKuala Lumpur.

In March this year, the group acquired interest in 25 oil palm operatingcompanies in Holdiko Palm Plantations - now known as Minamas Plantations -for RM1.4 billion through the Indonesian Bank Restructuring Agency (Ibra).

The acquisition involved some 203,000ha of oil palm plantations inIndonesia with estates covering Kalimantan, Sumatera and Sulawesi.

According to the analyst, selling part of its land in Malaysia would dolittle harm to Guthrie as it has quite a sizeable landbank domestically.

Based on the group's annual report 2000, its landbank in the country stoodat 107,883ha.

Meanwhile, Ghazali said that the company plans to raise US dollar loans torefinance its ringgit borrowings for the acquisitions in Indonesia.

Guthrie had raised an Islamic bridging loan of RM1.5 billion late lastyear to pay for the deal.

Ghazali declined to comment on the group's restructuring plans, but saidan announcement could be made by the year-end.

Shares of Guthrie ended unchanged on Friday at RM2.16.

Its unit Guthrie Ropel Bhd was also flat at RM3.08, while its othersubsidiary, Highlands and Lowlands Bhd gained one sen to RM2.59.

10 September 2001Business Times