Boustead Plantations sells land to pay off debts

KUALA LUMPUR (Jan 24): Boustead Plantations Bhd (BPB) plans to sell plantation land to pay off debts and tax.

The plantation group announced this evening that it intends to dispose of three parcels of freehold plantation lands measuring 138.89 hectares on mainland Penang for RM136.04 million to repay RM127.5 million bank borrowings, and RM6.8 million real property gains tax.

BPB has entered into two sale and purchase agreements with Sunrich Conquest Sdn Bhd and Titanium Greenview Sdn Bhd for the sale of 82.84 hectares, and 56.05ha of land, for RM81.14 million and RM54.9 million, respectively, according to the filing with Bursa Malaysia.

The sale by BPB was represented by CIMB Islamic Trustee Bhd, which also holds all plantation assets of Al-Hadharah Boustead REIT.

The sale consideration represents a premium of RM5 million or 4% over the fair market value of the lands of RM131 million accorded by the valuer Jones Lang Wootton.

BPB said in the announcement to the stock exchange that the lands form part of the 677.78ha Malakoff Estate in Tasek Gelugor, and it will continue to own and operate its plantation business on the remaining 562.33ha of the estate.

BPB said the lands’ strategic location provide an opportunity to realise the capital appreciation of the lands by disposing them at a substantial premium over the net book value of the lands.

In a separate statement BPB vice chairman Tan Sri Lodin Wok Kamaruddin said the proposed sale was an ideal opportunity for the group to enhance value for shareholders.

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 ha that would raise its shareholders value by about seven sen per BPB share, said Lodin.

By using the realised funds for repayment of bank borrowings, it will be able to carry out strategic expansion in new plantation land banks, hence growing BPB’s plantation revenue and profit in the future.

The proposed sale is subject to conditions precedent, amongst them obtaining the necessary approvals from the Estate Land Board and the Economic Planning Unit.

The proposed sale is expected to be completed by the third quarter of 2018.

At closing, BPB share price rose four sen or 1.43% to RM2.83 for a market capitalisation of RM2.65 billion. — theedgemarkets.com

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