TH Plantations sells Bintulu, Sibu assets for RM170m

This article first appeared in The Edge Financial Daily, on December 6, 2019.
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KUALA LUMPUR: TH Plantations Bhd (THP) is disposing of its 100% equity interests in Bumi Suria Ventures Sdn Bhd (BSV) and Maju Warisan Sdn Bhd to Tamaco Plantation Sdn Bhd for RM170 million.

In a statement yesterday, the company said the two non-performing companies own 6,513.8ha of oil palm plantations in Bintulu and Sibu, Sarawak.

It said the disposal of the assets, which was done via a tender exercise, is a part of THP’s rationalisation plan to revive its financial performance through the divestment of its assets to reduce borrowings and improve operational efficiency.

“The disposal of the companies was driven by their poor performance against projected production of FFB (fresh fruit bunches). THP, given its current financial constraints, takes the view that it is not in a position to continue with the plantation operations of the companies,” THP said.

The company expects to improve its gearing ratio from 1.09 times to 0.94 times, and reduce its profit margin expenses by approximately RM9.41 million per annum.

Upon completion of the disposal, the group would still own 94,462.08ha of oil palm and rubber plantations.

Given the inter-company advances owing by BSV to THP Suria Mekar Sdn Bhd of RM247.47 million, the disposal of the assets would result in a net loss on disposal of RM15.6 million.

The proceeds from the disposal will be used to repay financing obligations amounting to RM130 million, while the remainder will be used for working capital requirements, payment to creditors and to cover estimated expenses for the disposal.

THP rose five sen or 9.17% to 59.5 sen yesterday, bringing it a market capitalisation of RM525.89 million.