KUALA LUMPUR (Dec 21): Boustead Plantations Bhd (BPB) is disposing of its 76.1% equity interest in Boustead Sedili Sdn Bhd (Boustead Sedili) for RM60 million as part of its ongoing drive to unlock value.
In a statement today, BPB said it has entered into a conditional share sale agreement with Permodalan Darul Ta'zim Sdn Bhd (PDT) for the proposed disposal.
It said the sale consideration was reached on a willing-seller-willing-buyer basis and represents a premium of RM3.5 million or 6.2% over the adjusted effective net asset value of the sale shares held by BPB of approximately RM56.5 million.
Boustead Sedili is the beneficiary of a parcel of oil palm plantation land in Kota Tinggi, Johor, measuring 995.5 hectares.
Currently, BPB holds 76.1% interest in Boustead Sedili while PDT holds 23.9%. Upon completion of the exercise, Boustead Sedili will cease to be a subsidiary of BPB.
Once completed, BPB is expected to realise a total estimated net gain on disposal of RM31.5 million, which translates into a gain of approximately 2 sen per BPB share.
BPB vice chairman Tan Sri Lodin Wok Kamaruddin said Boustead Sedili's overall contribution to BPB was relatively small.
"Hence, in line with our strategic plans to enhance value, the proposed disposal of equity in Boustead Sedili is a prudent move which will enable the group to realise our investment at a premium.
"The proceeds gained from this disposal will be utilised for repayment of bank borrowings. This will allow us to reduce gearing and enhance our liquidity and cash flow to improve the group's profitability," he said.
At the midday break today, BPB rose four sen or 2.55% to RM1.61, for a market capitalisation of RM2.54 billion.