KUALA LUMPUR (July 29): United Malacca Bhd plans to double its plantation hectarage in Indonesia through a joint venture (JV) with an Indonesia firm.

In a bourse filing today, the century-old plantation firm said it has entered into a memorandum of understanding (MoU) with Adhi Indrawan and Kartika Dianningsih Antono to establish a JV arrangement with PT Bintang Gemilang Permai.

According to United Malacca, PT Bintang Gemilang Permai controls 99.9% equity interest in PT Wana Rindang Lestari, which in turn holds a concession right to develop about 59,920 hectares (ha) of land within an industrial plantation forest area in Central Sulawesi, Indonesia.

It would acquire a 60% equity interest in the JV company for an amount to be determined later, according to the filing.

The deal came after the group announced late last year that it was venturing into Indonesia by buying an 83% effective equity stake in PT Lifere Agro Kapuas for US$66.4 million (RM270.18 million), and would double its plantation land to 48,695ha from 24,110ha.

Today, United Malacca said the MoU is a formal confirmation of the both parties' intention to evaluate the possibilities of pursuing the proposed JV and allow it to conduct the necessary due diligence in connection with the deal.

"The MoU will enable the parties to further negotiate and execute definitive agreements within the exclusivity period," it added.

Should the proposed JV materialise, United Malacca said it would increase its plantation land bank and its geographical presence in Indonesia and diversify its crop base, in addition to its existing plantation estates in Kalimantan.

Shares in United Malacca closed down one sen or 0.17% at RM5.78, for a market value of RM1.21 billion.