Boustead Plantations proposes to sell land in Penang for RM136m

PETALING JAYA: Boustead Plantations Bhd (BPB) proposes to sell three pieces of its plantation land in Penang measuring a total 138.89ha for RM136.04 million.
It entered into sale and purchase agreements with Sunrich Conquest Sdn Bhd for a parcel of freehold land measuring 82.84ha for RM81.14 million cash, and with Titanium Greenview Sdn Bhd for two parcels of freehold land measuring 0.20ha and 55.85ha respectively for a total of RM54.90 million cash.
The 138.89ha land forms part of Malakoff Estate. Following the completion of the sale of part of the Malakoff Estate measuring 677.78ha on Sept 26, 2017 and this proposed sale, BPB will continue to own and operate its plantation business on the remaining 562.33ha of Malakoff Estate.
The sale consideration represents a premium of about RM5 million or 3.82% over the market value of RM131 million accorded by the valuer.
“The strategic location of the land provides an opportunity for BPB to realise the capital appreciation of the land by disposing them at a substantial premium over the net book value of the land. BPB will realise an estimated gain of about RM115.9 million upon completion of the proposed sale, representing an upfront gain of about RM834,000 per hectare, which will increase BPB’s shareholders value by about 7 sen per BPB share,” BPB said in a stock exchange filing.
Given the strategic location of the land, BPB is able to unlock and realise higher return through the proposed sale. This gives BPB the opportunity to use the realised funds for repayment of bank borrowings for the purpose of strategic expansion in new plantation land banks.
Upon completion of the proposed sale, BPB is expected to realise an estimated net gain of about RM115.90 million, which translates into a gain of about 7 sen per BPB share.
The exercise is expected to be completed by the third quarter of 2018.