Boustead Plantations signs SPA with Dutaland for Sabah lands

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KUALA LUMPUR (Oct 30):  Boustead Plantations Bhd has signed a sales and purchase agreement (SPA) with Dutaland Bhd today, for the acquisition of 42 parcels of leasehold plantation lands in the Labuk and Sugut districts in Sabah for RM750 million.

In a filing with Bursa Malaysia, Boustead Plantations said the land plots — currently cultivated with oil palm — have a combined size of 11,579.31 hectares (ha), and houses all the buildings, agricultural equipment, machineries, vehicles and other amenities located on the properties.

According to Boustead Plantations, its wholly-owned subsidiary Boustead Rimba Nilai Sdn Bhd (BRNSB) entered into the SPA with Pertama Land & Development Sdn Bhd, which is wholly-owned by Dutaland, for the proposed acquisition.

The purchase consideration was derived at on a “willing-buyer willing-seller” basis, after taking into consideration the market value of the plantation assets, I.e. RM760 million as at the material date of valuation of Oct 10 this year, which means the RM750 million represents a discount of RM10 million or 1.3% from the assets’ market value, the filing added.

Boustead Plantations said 86.35% of the lands has been planted with oil palms, of which 64.01% are in their prime mature age.

The average fresh fruit bunch production of the estates was 7.82 metric tonnes per hectare for the financial year ended June 30, 2017, while the plantation profit came in at RM24.68 million.

Boustead Plantations said it intends to fund the proposed acquisition via internally-generated funds and borrowings, whereby RM450 million will be loaned from the bank, while the remaining RM300 million will be from the group’s own funds.

The exercise is part of its strategy to acquire more plantation lands in Malaysia, “in view of the scarcity of suitable and sizeable land banks for oil palm cultivation”, the group said.

Once completed, its total plantation land bank will increase by 15.7% in terms of total planted area of oil palms, from 63,840ha to 73,838ha.

“The proposed acquisition represents a move to replace some of BPB Group’s plantation lands in Peninsular Malaysia, which were disposed in recent years with sizable plantation lands in Sabah at a lower cost,” the filing added.

“This is in view of the rapid developments in Peninsular Malaysia which have resulted in lands being less viable for plantation activities. This strategy also presents BPB Group, with the opportunity to improve its income over the long term for its future growth.”

On outlook, Boustead Plantations said the palm oil industry is recognised as a main contributor to the domestic economy. Hence, it is of the view that the future prospects of the estates will remain favourable.

It currently operates 13 estates and four palm oil mills, with a total plantation land of 29,482ha in Sabah, of which 27,221ha is planted with oil palms.
The proposed acquisition is expected to be completed by the second quarter of 2018.
Boustead Plantations settled unchanged at RM1.63 today, valuing it at RM2.61 billion.