09/10/2012 (Malay Mail) - Lion Forest Bhd’s wholly-owned subsidiary, LFIB Plantations Sdn Bhd, has entered into an agreement with PT Karya Tekhnik Utama and Kyosen Transport Pte Ltd to acquire the entire stake in Indonesia based PT Varita Majutama for RM197.63 million.

The proposed acquisition was an opportunity to tap into the oil palm industry in Indonesia — to diversify its earnings into a stable, growing business in the long-term that is expected to give reasonable returns to the group, said in its Bursa filing on Friday.

“Palm oil business is expected to have good upside potential, as global demand for crude palm oil is anticipated to be strong in the long term,” it said.

The company said pursuant to the Indonesian laws, a foreign investor was only allowed to own up to a maximum of 95% shareholding in a plantation company in Indonesia and a plantation company must at least have one local Indonesian shareholder.

Lion Forest said the purchase consideration was proposed to be funded by borrowings or internally generated funds of the group.

“The company is considering its financing options and upon finalisation, Lion Forest will make an announcement in due course,” it said.

PT Varita was incorporated in Indonesia in 1992 as a foreign investment company wherein PT Karya and Kyosen hold 70% and 30% interests respectively.