KUALA LUMPUR (Oct 21): Malayan Flour Mills Bhd (MFM) has proposed to lease three pieces of land, measuring 200 acres in Lumut, Perak, from the Perak State Agricultural Development Corp (PSADC) for RM2.53 million.

This will be satisfied by the issuance of 1.96 million new MFM shares to PSADC, at an issue price of RM1.29 per share. It will also issue one special share in its wholly-owned subsidiary, Dindings Poultry Development Centre Sdn Bhd (DPDC), to PSADC.

In a filing with Bursa Malaysia today, MFM said the lands currently house 27 breeder houses, old hatchery buildings with new extension, a flourmill factory with warehouses, storage area, related buildings and facilities. MFM Group has been operating on the said lands for the past 25 years.

It is also proposing to lease another three pieces of land, measuring 464.96 acres in Pengkalan Baru, Perak, from PSADC for RM4.65 million, to be satisfied by the issuance of 3.6 million MFM shares at an issue price of RM1.29 per share.

The lands currently sites a broiler breeder farm and accommodates chicken houses, office building, as well as other related buildings and facilities. MFM Group has been operating on the said lands for the past 22 years.

MFM said the lease period of the six lands are for 30 years, with automatic renewal of another 30 years.

However, it is unable to disclose the net book value of all the lands as MFM is not privy to such information.

MFM also plans to acquire 2.96% and 17.55% of the equity interest in Dindings Poultry Processing Sdn Bhd (DPP) and Dindings Soya & Multifeeds Sdn Bhd (DSM) respectively, from PSADC, for a combined RM8.32 million or RM1.29 per share.

The acquisition of DPP will see MFM’s stake increasing to 97.7%, from 94.74%; while its stake in DSM will increase to 87.76%, from 70.21%.

DPP is involved in the processing and selling of poultry products, while DSM is principally involved in the manufacture and sale of animal feeds.

MFM said that DPDC has entered into two lease agreements with PSADC today, for the proposed leasing of lands. DPDC has also signed a conditional sale of shares agreement with PSADC, for the proposed acquisition of DPP and DSM.

MFM added that the proposed leasing of lands are mainly for the poultry integration business of the group, while the proposed acquisitions will facilitate the group’s aspiration to further expand its poultry integration business.

It expects the proposed transactions to be completed in the first quarter of 2016.

MFM's shares closed 1 sen or 0.75% higher at RM1.35 today, bringing its market capitalisation to RM726.61 million.

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