This article first appeared in The Edge Financial Daily on February 13, 2019

KUALALUMPUR: The government will not interfere in the dispute between Indonesian-based Rajawali Group and Federal Land Development Authority (Felda) on the “put option” giving the Malaysian statutory body the right to claim back more than US$500 million which it had invested in Eagle High Plantations Tbk.

The matter has been brought to the court, but Rajawali is challenging Felda on the matter.

“The (Felda) board will look into this matter thoroughly. The government does not interfere in the decisions made by the board,” Economic Affairs Minister Datuk Seri Mohamed Azmin Ali told the press on the sidelines of the Chinese New Year celebration organised by the Malaysian Hokkien Association yesterday.

“Let the process continue. They should resolve this matter amicably,” Mohamed Azmin said.

Mohamed Azmin was responding to questions as to whether he would intervene in the process given that the Felda has now been parked under the economic affairs ministry .

Felda has reportedly proposed to walk away from its partnership with Rajawali — the vehicle of Tan Sri Peter Sondakh — and demand back for the amount invested in the latter’s palm estate and sugar manufacturing assets in Indonesia in May 2017.

Felda’s acquisition of a 37% interest in Rajawali’s Eagle High Plantations Tbk has been the subject of much controversy as questions mounted as to why the board decided to pay a high price tag of US$505.4 million, being a 95% premium to the market price then, for a non-controlling stake.

The acquisition however comes with a put and call option in the sales and purchase terms. Under the terms, if Eagle High does not get the Roundtable on Sustainable Palm Oil certification by 2019, Felda could exercise the put option, which will require the Rajawali group to buy back the 37% stake at 6% interest a year.