28/10/2011 (The Star) - Dutaland Bhd and IOI Corp Bhd waged a war of words via Bursa Malaysia website regarding the termination of a proposed acquisition of a large piece of oil palm plantation land in Sabah that was to cost IOI Corp Bhd RM830mil.

IOI Corp paid 10% of the price and may lose its deposit of RM83mil for the 11,977.91ha.

This is the second time in three years that IOI Corp, one of the largest plantation and property companies, has aborted a deal.

In August 2008, IOI Corp agreed to pay RM586.7mil, or RM1,000 per sq ft, for Menara Citibank to the building owner Inverfin Sdn Bhd. However, three months later, IOI aborted the deal, citing concerns over the economy. IOI forfeited RM73.36mil of its initial payment. The global financial crisis hit world markets one month later when Lehman Brothers fell.

In the current deal, IOI and Dutaland Bhd entered into a sale and purchase agreement (SPA) via their respective units IOI's Sri Mayvin Plantation Sdn Bhd and Dutaland's Pertama Land & Development Sdn Bhd.

Sri Mayvin was to buy the Sabah land from Pertama Land. IOI called off the deal on Oct 25.

Dutaland is now seeking legal advice as it refused to accept Sri Mayvin's accusation that Pertama Land breached terms and conditions in the SPA.

IOI posted its statement first, stating that its unit had communicated to the vendor three times this month about the “incidences of non-compliance/breach of the SPA”. In a statement later, Dutaland said its unit, Pertama Land, was “not in breach of the SPA as alleged by Sri Mayvin.”

“Neither has there been non-compliance on the part of Pertama Land under the SPA as alleged,” the Dutaland statement said.

Had the deal gone through, the proposed acquisition would increase IOI group's plantation landbank by 11,977.91ha, or 6.69%, from its present 178,884ha to 190,862ha in Malaysia.

IOI alleged that Pertama Land failed to maintain the land according to acceptable agronomic practices. IOI also alleged that there were discrepancies in the particulars relating to the properties. It also questioned the “integrity of the title of Pertama Land in relation to one of the properties.”

Dutaland said Pertama Land had continued to operate and manage the properties with due diligence and to maintain and cultivate the said properties and harvest the crops according to good husbandry, including timely manuring of the land.

When the proposed purchase was announced, analysts were generally neutral on the acquisition as IOI Corp would need to rehabilitate the Sabah estates for the next three to four years before reaping good yields. IOI is known as an efficient planter.