Thursday 28 Mar 2024
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KUALA LUMPUR (April 24): Kuala Lumpur Kepong Bhd (KLK) said it is buying a 60% stake in an Indonesian oil palm company for RM341.55 million to boost its plantation landbank.

The stake in PT Pinang Witmas Sejati (PWS) is currently held by Ladang Lekir Sdn Bhd, an indirect wholly-owned subsidiary of the Perak State Agricultural Development Corporation. The remaining 40% equity interest is controlled by PT Trimitra Sumberbuana.

KLK said it is buying the stake in PWS - which operates oil palm plantations and is involved in the crude vegetable oil industry - through its Singapore-based wholly-owned unit Taiko Plantations Pte Ltd.

The purchase will be funded by a combination of KLK’s existing cash reserves and bank borrowings, the group said in a filing with Bursa Malaysia.

KLK added that the acquisition of the stake gives the group an opportunity to buy a company with a brownfield oil palm plantation, and in line with its business direction to expand its plantation landbank.

PWS has been granted two Hak Guna Usaha (Land Cultivation Rights) titles for 14,738.4ha of land (expiring in 2034) and another 242.09 ha of land (expiring in 2038).

Both plots are located in Kecamatan Bayung Lencir, Kabupaten Musi Banyuasin in South Sumatera.

A total of 14,106 ha of both the land titles are planted, said KLK, adding that there is also a 90-tonne-per-hour palm oil mill situated on the land, which supports PWS’ oil palm operations.

KLK said the acquisition is expected to be completed in the third quarter of 2020.

Shares of KLK closed 10 sen or 0.49% lower at RM20.30 today, valuing the group at RM21.94 billion. Year to date, the counter has fallen by 18.15%.

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