United Plantations buys Perak land from Pinehill Pacific for RM413.57m

PETALING JAYA: United Plantations Bhd is acquiring 8,999.13 acres of plantation land in Hilir Perak from Pinehill Pacific Bhd for RM413.57 million.
Pinehill shares hit limit up after it resumed trading in the afternoon session today. At 2.50pm, it was trading at 44 sen, up 30 sen or 214.3%. Meanwhile, United Plantations was trading at RM27.50, up 0.1%.
United Plantations said in a filing with the stock exchange that the proposed acquisition is expected to increase its Malaysian plantation landbank by almost 10% from about 10,0870.88 acres to 10,9870.46acres, thereby increasing its total landbank to 155,987.74 acres from the current 146,988.16 acres.
The group expects the deal to contribute positively to its earnings as well as the shareholders’ value in the medium- to long-term.
The first asset which will be acquired for RM350.3 million comprises five parcels of land measuring 7615.42 acres together with the palm oil, workers living quarters and the site office of Pinehill's 94.5%-owned subsidiary Pinehill Plantations (Malaysia) Sdn Bhd.
In addition to that, United Plantations will be buying two parcels of land measuring 954.42 acres and 429.29 acres for RM43.52 million and RM19.75 million, respectively.
Pinehill said the proposed disposal provides an opportunity for the group to unlock and realise the value of its investment.
"Given the size, location, the remaining tenure and market value of the plantation assets, it is not easy for Pinehill to dispose of the plantation assets to a single buyer. As such, the proposed disposal appears to be an attractive offer that is in line with the group’s objective to enhance shareholders value,” it explained.
Pinehill added that the proposed disposal will enable it to raise funds to repay bank borrowings and for the development of the remaining of its plantation land in Kalimantan Barat, Indonesia as well as to accelerate the planting programme of its Indonesian assets which had previously been limited by working capital insufficiency.
Additionally, proceeds from the disposal will be used for the construction of palm oil mill in Indonesia.