FGV grants Eonmetall build, operate, transfer rights to six plants

-A +A

KUALA LUMPUR (Oct 4): Eonmetall Group Bhd has secured the exclusive rights from a unit of FGV Holdings Bhd to build palm fibre oil extraction plants at six selected mill locations, then own and operate them for a concession period of 10 years, before transferring their ownership to the FGV unit.

The build, own, operate and transfer (BOOT) arrangement was entered into yesterday between Eonmetall's wholly-owned unit Eonmetall Carotene Oil Sdn Bhd (ECOSB) and FGV's indirect, wholly-owned Felda Palm Industries Sdn Bhd (FPISB).

The two companies will ink six separate agreements to formalise the BOOT arrangement for all the plants at the designated mills, Eonmetall said in a statement filed to Bursa Malaysia today.

Under the BOOT arrangement, ECOSB gets the exclusive right to "design, engineer, finance, construct, commission, own, operate, transfer, maintain and manage" the extraction plants in the vicinity of the mills. Land for the project will either be leased or licensed or subleased/sublicensed by FPISB to ECOSB. The 10-year concession period will begin from the start of commercial operations of the plants.

FPISB will supply the required amount of palm mesocarp fibre processed from fresh fruit bunch yearly to the plant, for the purpose of extraction.

"In consideration of the rights granted, ECOSB agreed to re-deliver the de-oiled mesocarp fibre and share some percentage of the revenue or profit arising from the sale of red crude palm oil from the extraction process activity," it said.

Eonmetall said the project may be implemented at four more mills belonging to FPISB, upon the successful completion, commissioning, operation and commercialisation of all mills under this first phase.

Eonmetall expects the project to have a positive impact on its net assets, gearing and earnings per share, for the financial year ending Dec 31, 2018.

Eonmetall shares closed five sen or 11.1% higher at 50 sen today, bringing it a market capitalisation of RM92.81 million. Year to date, the stock has retreated about 31%, from the closing price of 72.2 sen on Dec 29, 2017.