United Malacca pays RM285 million for 83% of Indonesian oil palm firm

PETALING JAYA: United Malacca Bhd (UMB) is buying an 83% stake in Indonesian oil palm plantation firm, PT Lifere Agro Kapuas (LAK), for RM285.02 million in cash as the group is one of the major players in the plantation industry.
In a stock exchange filing yesterday, UMB said it will acquire 793,837 ordinary shares representing an 88.2% stake of International Natural Resources Pte Ltd (INR), which in turn holds about 94.1% equity interest in LAK, from Lincoln Wilshire Investments Ltd.
LAK has a plantation licence spread over 24,585ha of oil palm plantation in central Kalimantan, Indonesia, out of which 5,100ha have been registered in its name. It also has a location permit for 350ha of land for refinery and bulking, out of which 29ha have been registered in its name.
“The proposed acquisition is in line with UMB’s long-term strategy to increase its interest in the palm oil industry and to focus its financial resources in further expanding its plantation operations, both domestically and regionally,” it said.
It said that the deal would double the group’s total plantation landbank by 24,585ha from 24,110ha presently.
It will also expedite UMB group’s upstream expansion as some 10,366ha have already been planted with about 10,140ha less than five years of age.
It added that the total mature area of the plantation land as of October is about 226ha, constituting only 1.3% of the total plantable area under the plantation land.
“As such, with a fairly young crop profile, the proposed acquisition is expected to contribute positively to the earnings as well as shareholders’ value of the group in the future as the plantation matures and reaches their prime age,” it said.
UMB said it has secured a term loan up to US$50 million (RM215 million) from OCBC Bank (Malaysia) Bhd to part finance the purchase, while the remaining balance is expected to be funded from the group’s internal funds.
The acquisition is targeted to be completed in the first quarter of 2016.
In a separate announcement, UMB said its net profit for the period ended Oct 31, 2015 fell 10.5% to RM12.25 million compared with RM13.69 million in the corresponding quarter a year ago mainly due to a 7% drop in fresh fruit bunches (FFB) production.
Revenue was 15.4% lower at RM49.8 million from RM58.9 million before.
UMB declared a first interim single-tier dividend of 8 sen for the current financial year ending April 30, 2016.
UMB said FFB production for the current financial year will be below target due to the severe drought experienced in Sabah for the past 10 months.
“Barring unforeseen circumstances, the Group expects satisfactory result for FY 2015/16,” it said.