MARKET DEVELOPMENT
Kulim Informs PNG on Plan to Sell Plantations to Sime
Kulim Informs PNG on Plan to Sell Plantations to Sime
01/08/2014 (The Star) - After two months of intense bidding exercise, Sime Darby Bhd has taken the lead to close in on New Britain Palm Oil Ltd (NBPOL).
In an announcement yesterday, Sime said that it had been selected as the preferred party to negotiate a sale of Kulim (M) Bhd’s equity interest in NBPOL that is listed in London.
“Kulim has now entered into exclusive discussions with Sime Darby to finalise the terms of the transaction,” Sime Darby said.
In a separate announcement, Kulim said that it sent a letter yesterday to NBPOL and the relevant government authorities in Papua New Guinea (PNG) to inform them of its intention to sell its entire equity stake in NBPOL to Sime Darby.
Kulim said the discussions would see the terms of the transaction being finalised for a period of 60 days or longer that would be mutually agreed upon.
The race for the sale of NBPOL started in May this year with Felda Global Ventures Bhd (FGV) first expressing interest to acquire the stake from Kulim.
Following a competitive bidding process, seven others entered the fray for NBPOL.
It included two plantation groups from Indonesia and Singapore’s Wilmar International Ltd and three plantation giants from Malaysia joining FGV.
The three Malaysian companies were Sime, IOI Bhd and KLK Bhd.
Kulim wanted to dispose of the stake because although it is the single largest shareholder in NBPOL with 48.97%, it is unable to exert management control over the plantation group that is a source of significant employment in PNG.
NBPOL is managed by a group of professional managers that have a stake in the company through Pacific Rim Plantations Services Pte Ltd.
Pacific Rim has a 4.49% stake in NBPOL while the West New Britain Provincial Government has a 8% stake in the plantation company.
Kulim had wanted to raise its stake in NBPOL by 20% to about 69% through a corporate exercise announced in July last year but that was shot down by the independent directors.
Kulim finally aborted its plans after the PNG market regulator also came down hard on the Johor Corp-owned company preventing it from taking any steps to increase its stake in NBPOL.
There was said to be intense negotiations between FGV, Sime Darby and Kulim.
FGV was publicly seen as the front-runner for NBPOL as it was the first company to confirm its interest for the latter and was prepared to pay the price sought.
But Wilmar was the plantation group tipped to win because it was one of the customers of NBPOL and by virtue of that had dealings with the management.
“But Sime was finally chosen because it stands a better chance to get the PNG government’s approval,” said sources.
NBPOL has 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool, England, which gives it easy access to the European market.
Plantation yields at PNG are also better than in Malaysia, with yields that can go up to 26 to 27 tonnes per ha with an oil extraction rate of up to 24%.
The company is presently publicly-listed on the London Stock Exchange and was last traded at £5.18 and has a market capitalisation of £778mil.
NBPOL had risen significantly in the year-to-date (YTD) period gaining 30.77% until yesterday despite subdued palm oil prices throughout the YTD period.
On Bursa Malaysia, Sime Darby yesterday closed 14 sen lower to RM9.50 while FGV lost 8 sen to RM4.02.
In an announcement yesterday, Sime said that it had been selected as the preferred party to negotiate a sale of Kulim (M) Bhd’s equity interest in NBPOL that is listed in London.
“Kulim has now entered into exclusive discussions with Sime Darby to finalise the terms of the transaction,” Sime Darby said.
In a separate announcement, Kulim said that it sent a letter yesterday to NBPOL and the relevant government authorities in Papua New Guinea (PNG) to inform them of its intention to sell its entire equity stake in NBPOL to Sime Darby.
Kulim said the discussions would see the terms of the transaction being finalised for a period of 60 days or longer that would be mutually agreed upon.
The race for the sale of NBPOL started in May this year with Felda Global Ventures Bhd (FGV) first expressing interest to acquire the stake from Kulim.
Following a competitive bidding process, seven others entered the fray for NBPOL.
It included two plantation groups from Indonesia and Singapore’s Wilmar International Ltd and three plantation giants from Malaysia joining FGV.
The three Malaysian companies were Sime, IOI Bhd and KLK Bhd.
Kulim wanted to dispose of the stake because although it is the single largest shareholder in NBPOL with 48.97%, it is unable to exert management control over the plantation group that is a source of significant employment in PNG.
NBPOL is managed by a group of professional managers that have a stake in the company through Pacific Rim Plantations Services Pte Ltd.
Pacific Rim has a 4.49% stake in NBPOL while the West New Britain Provincial Government has a 8% stake in the plantation company.
Kulim had wanted to raise its stake in NBPOL by 20% to about 69% through a corporate exercise announced in July last year but that was shot down by the independent directors.
Kulim finally aborted its plans after the PNG market regulator also came down hard on the Johor Corp-owned company preventing it from taking any steps to increase its stake in NBPOL.
There was said to be intense negotiations between FGV, Sime Darby and Kulim.
FGV was publicly seen as the front-runner for NBPOL as it was the first company to confirm its interest for the latter and was prepared to pay the price sought.
But Wilmar was the plantation group tipped to win because it was one of the customers of NBPOL and by virtue of that had dealings with the management.
“But Sime was finally chosen because it stands a better chance to get the PNG government’s approval,” said sources.
NBPOL has 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool, England, which gives it easy access to the European market.
Plantation yields at PNG are also better than in Malaysia, with yields that can go up to 26 to 27 tonnes per ha with an oil extraction rate of up to 24%.
The company is presently publicly-listed on the London Stock Exchange and was last traded at £5.18 and has a market capitalisation of £778mil.
NBPOL had risen significantly in the year-to-date (YTD) period gaining 30.77% until yesterday despite subdued palm oil prices throughout the YTD period.
On Bursa Malaysia, Sime Darby yesterday closed 14 sen lower to RM9.50 while FGV lost 8 sen to RM4.02.