KUALA LUMPUR (June 16): Boustead Plantations Bhd has entered into Sales and Purchase Agreements (SPA) for proposed disposals of eight parcels of freehold land totalling 159.15 ha in Kulaijaya, Johor, for RM94.22 million.

In a filing with Bursa Malaysia today, Boustead Plantations (fundamental: N/A; valuation: N/A) said it has on yesterday (June 15) entered into two SPA in relation to the proposed disposal.

According to the plantations group, the first SPA was between CIMB Trustee and Sanggul Suria Sdn Bhd (SSSB), for the proposed disposal of three parcels of freehold land in Kulaijaya, Johor, which has a collective land size of 57.03 ha for RM12.28 million.

Another SPA, according to the group, was between its wholly-owned subsidiary Boustead Sungai Manar Sdn Bhd (BSM) and Hanson Quarry Products (Segamat) Sdn Bhd (HQSB), for the proposed disposal of 5 parcels of freehold land in Kulai, measuring 102.12 ha for RM81.94 million.

Recall that Boustead Plantations had on May 19 this year, announced its plans to dispose of two parcels of freehold land measuring 88.17 ha in Kulaijaya, Johor, for RM49 million cash.

It said the lands are currently used for quarry and/or plantation related activities.

"The total audited net book value of the lands as at Dec 31, 2014 was RM14 million," it added.

On the rational, Boustead Plantations said the deal would offer a good opportunity for the group to unlock and realise the value of its investments in the lands.

"Further, the proposed disposals will enable us to dispose all of its quarry related activities which are non-core to us," it added.

The group plans to use the proceeds raised from the disposals for the repayment of bank borrowings and/or working capital.

Upon completion of the proposed disposals, Boustead Plantations is expected to realise an estimated gain of RM121.74 million (net of taxation and estimated expenses), which translates into a gain of approximately 7.6 sen per share for the financial year ending Dec 31, 2015.

The group's net gearing ratio also will reduce to 0.29 times from 0.37 times currently.

"Barring any unforeseen circumstances, the proposed disposals are expected to be completed by the fourth quarter of 2015," it said.

At 12.30pm, shares in Boustead Plantations settled at RM1.32, down three sen or 2.22%, giving it a market capitalisation of RM2.16 billion.

Some 121,200 shares changed hands during the morning trading session.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)