Boustead Plantations buys land, assets in Sabah for RM397m cash

PETALING JAYA: Boustead Plantations Bhd is acquiring oil palm plantation land measuring 4,915.25ha in Sabah together with a palm oil mill, buildings erected, movable assets, machinery and vehicles for RM397 million cash.
The group told Bursa Malaysia that its wholly owned subsidiary Boustead Rimba Nilai Sdn Bhd entered into a sale and purchase agreement today with the vendors for the acquisition.
Boustead Plantation said the purchase sum represents a premium of RM3.7 million or 0.94% over the market value of the plantation assets, excluding a workshop and building materials located on one piece of the plantation land.
It intends to finance the proposed acquisition with internally generated funds (RM47 million) and bank borrowings (RM350 million).
The average production of fresh fruit bunches for the land stood at 5.81 metric tons per acre for the financial year ended April 30, 2017. Its plantation profit grew 31% to RM16.65 million for the same period against RM12.71 million a year ago.
Boustead Plantations said the acquisition represents a move to replace some of the group’s plantation land in Peninsular Malaysia which was disposed of in recent years with sizeable plantation land in Sabah at a lower cost.
“This is in view of the rapid developments in Peninsular Malaysia which have resulted in land being less viable for plantation activities.”
This strategy also presents the group with the opportunity to improve its income over the long term for its future growth, it said.
Upon completion of the proposed acquisition, Boustead Plantations’ total plantation landbank will increase about 5% from 93,417ha to 98,332ha, while the total oil palm planted area will rise 6% from 74,985ha to 79,427ha.
On Bursa Malaysia today, Boustead Plantations declined 1 sen or 0.8% to RM1.27 on volume of 222,600 shares.