KUALA LUMPUR: FGV Holdings Bhd, one of the world’s biggest palm oil producer, is now in hot water following the Federal Land Development Authority’s (Felda) move to terminate its land lease agreement (LLA) with the group.
The spat that started about two weeks ago has came to a boiling point yesterday after FGV issued a statement saying that it has yet to receive a written notice from Felda on the LLA termination.
FGV said once it receives an official notice from Felda as required under the LLA, it will follow the procedures outlined in the LLA to start the process of termination and determine the compensation due, which will take 18 months to complete.
“As LLA termination had always been a much-talked about scenario, FGV has already prepared its businesses and operations for this eventuality,” the country’s largest crude palm oil producer said.
According to FGV, the expected compensation amount due to the company as a result of the LLA termination may range between RM3.5 billion and RM4.3 billion based on internal assessment which will vary depending on FGV’s financial performance for 2020 and 2021 and various other factors.
The LLA refers to Felda-owned estates totalling 350,733 hectares that were leased to FGV for 99 years since Nov 1, 2011.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, in a statement, said the termination of the LLA and issuance of a RM9.9 billion worth sukuk by Felda were some of the proposals approved by the Cabinet to ensure the agency’s recovery.
On stock performance, FGV has remained relatively stable despite the US ban on its products for the time being.
Year to date, the highest price point was at RM1.56 per unit at the beginning of the year before dipping to 72 sen in March due to global economic shutdown to tackle Covid-19.
Over the past month, it has stabilised to above RM1.00 despite ongoing discussions with the US on the product ban.
As at 10.02am today, FGV stock added one sen to RM1.09, with 796,100 shares traded. -Bernama
