KUALA LUMPUR (April 12): FGV Holdings Bhd agrees there is urgent need to discuss the terms of its land lease agreement (LLA) with the Federal Land Development Authority (Felda), as the matter has been raised repeatedly over the last three years.
FGV said in a statement today that the matter has caused "much uncertainty and concern" for its shareholders.
"Under the current terms of the LLA, FGV is required to pay a fixed lease payment of about RM250 million per year for 99 years, commencing from 2012. The RM250 million is paid irrespective of prevailing crude palm oil (CPO) prices. In 2012, when the LLA was negotiated, average CPO price was RM2,843 per MT. CPO price on 10 April 2019 was RM2,047 per MT.
"Additionally, FGV has committed to pay FELDA a 15% share of estate operating profits. FGV has met all its obligations under the LLA. As a listed company, FGV would also be required to seek the approval of its shareholders for any proposed amendments to the LLA," FGV said.
Under its new management, FGV said the company is focused on its group-wide transformation plan which has started to show results.
"FGV will be announcing its 1Q2019 financial results in May 2019 and is positive that all the measures implemented since October 2018 will set the company on a path for sustainable growth," FGV said.