KUALA LUMPUR (Nov 19): Agrochemicals maker Halex Holdings Bhd will buy and package rice for the Federal Land Development Authority (Felda) under a planned two-year contract with the government entity.

In a statement to Bursa Malaysia today, Halex said it received the letter of offer from Koperasi Majlis Belia Felda Malaysia Bhd (KMBFM).

"The letter of acceptance shall form part of the contract and shall be binding. Until the contract is signed, this letter of acceptance shall be deemed as a valid contract.

"The above contract is an expansion of the company's rice trading business following Halex's recent proposed acquisition of a 70% equity interest in SL Aktif Sdn Bhd, which has also received a letter of offer from KMBFM to procure and package rice under the GMN Project (Project Gedung Makanan Negara or Food Bank Project) as announced on Nov 11, 2015," Halex said.

Halex said the estimated contract value would be up to RM184 million involving 80,000 tonnes of white rice a year.

"The contract tenure is for two years effective from 2015 to 2017. The contract may be extended by one year from 2017 to 2018 subject to negotiation and mutual agreement," Halex said.

At a press conference here earlier, Halex executive deputy chairman Datuk Masood Zainal Abidin said the mechanics of the contract would allow the company to purchase rice on the open market and package the grain for delivery to KMBFM.

"This contract win will significantly affect Halex's future revenue and bottom line. As per the terms of the letter of offer, Halex will charge a premium of RM200 per metric tonnes supplied to KMBFM, amounting to a gross profit of approximately RM16 million assuming that all 80,000 metric tonnes are supplied," he said.

At 2.55pm, Halex shares rose two sen or 4% to 55 sen, bringing its market capitalisation to RM58.3 million. The stock saw some four million shares done.

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