KUALA LUMPUR (Aug 18): Genting Plantations Bhd is buying Knowledge One Investment Pte Ltd, a wholly-owned unit of Lee Rubber Co (Pte) Ltd, which owns oil palm plantations in south Kalimantan, Indonesia, for US$94.97 million cash.
The deal will expand the group’s plantation landbank across Malaysia and Indonesia to 242,597 hectares — of which 84,833 hectares will have been planted in Indonesia alone.
Genting Plantations announced to Bursa Malaysia today that its indirect wholly-owned subsidiary AsianIndo Holdings Pte Ltd has entered into a conditional Sale and Purchase Agreement (SPA) with Lee Rubber to buy 20 million shares or 100% stake in Knowledge One.
Knowledge One, said Genting Plantations, through its 85%-owned subsidiary PT Kharisma Inti Usaha (KIU) holds the rights to cultivate 14,661 hectares of land in Kabupaten Tapin in South Kalimantan into oil palm plantations.
KIU also owns a palm oil mill with a capacity of 60 metric tons-per-hour (MT/h), it added.
Of the total land owned by KIU, 12,893 hectares have been replanted, while 11,555 hectares of the plantation has an age profile of over four years old.
Meanwhile, fresh fruit bunches (FFB) production of the land has increased steadily from 55,116 tonnes in 2014 to 95,181 tonnes in 2016.
Upon completion of the proposed acquisition, Genting Plantations will have an effective equity interest of 85% in KIU, with PT Kharisma Induk Mitra and Ong Keang Saang holding the remaining 12.5% and 2.5% stake respectively.
To-date, Lee Rubber has invested a paid-up capital of S$20 million (RM62.92 million) in Knowledge One, according to the filing with Bursa this evening.
The purchase consideration was made after considering Knowledge One and KIU’s assets totalling US$166.53 million, deducted by loans totalling US$71.56 million which will be assumed by AsianIndo, based on its shareholding in the two companies.
“KIU’s land is situated close to its Genting Plantations landbanks in Kalimantan, providing potential benefits from operational synergies and economies of scale,” it said.
“The addition of KIU’s palm oil mill will bring Genting Plantations’ ownership of oil mills in Indonesia to four units with a total milling capacity of 255MT/h,” it added.
Genting Plantations said it will fund the acquisition through external funding. Its trailing-twelve-month net gearing stood at 19.82 times presently.
As at June 30, Getting Plantations had total borrowings of about RM2.46 billion, of which RM2.35 billion was long term liabilities against cash of RM1.52 billion.
Genting Plantations share price climbed 12 sen or 1.16% at RM10.48, giving it a market capitalisation of RM8.42 billion.