Sime Darby Plantation sells off loss-making Indonesian unit

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KUALA LUMPUR (June 26): Sime Darby Plantation Bhd (SDP) has disposed of its Indonesian subsidiary PT Mitra Austral Sejahtera (PT MAS) to PT Inti Nusa Sejahtera (PT INS) for US$29.7 million (RM123.1 million).

PT MAS owns 7,074.04ha of oil palm plantation in Kabupaten Sanggau, Kalimantan Barat, Indonesia.

In a filing with Bursa Malaysia today, SDP said its indirect wholly-owned subsidiaries PT Ladangrumpun Suburabadi and PT Teguh Sempurna had yesterday disposed of their respective 99.9993% and 0.0007% equity interest in PT MAS to PT INS.

SDP said the disposal is not expected to have any material effect on the group's earnings, consolidated net assets and consolidated gearing for the financial year ending Dec 31, 2019.

Earlier, SDP had confirmed an announcement on the intention of PT INS to acquire the entire stake in PT MAS was published in a local Indonesian media on Feb 26.

SDP had explained then that the decision to sell-off the stake in PT MAS was driven mainly by the poor financial performance of the asset.

"Since it was established within SDP in 1996, PT MAS has accumulated losses totalling over RM300 million as at December 2018.

"Our board of directors has concluded that this poor financial performance is no longer tenable. This decision also aligns with the group’s current strategy of reviewing our investment in non-performing assets," SDP had said.

SDP shares ended the morning session down 3 sen or 0.61% at RM4.86, with 569,200 shares done, bringing a market capitalisation of RM33.46 billion.