FELDA MUST PAY RM4.5B TO FGVH IF LAND LEASE DEAL IS TERMINATED
FGV will also need 18-month notice to return plantations, says source
FEDERAL Land Development Authority (Felda) has to pay Felda Ventures Holdings Bhd (FGV) a punitive amount of between RM3.2 billion and RM4.5 billion if it wants to cancel the 99year land lease agreement (LLA).
A source said Felda had to give FGV an 18-month notice if it planned to take back the 300,000ha leased out to FGV.
“As a 33.67 per cent associate of Felda, FGV will comply if the parent wants to scrap the LLA and take back its oil palm plantations,” the source told NST Business.
Felda chairman Tan Sri Shahrir Abdul Samad has said it was open to cancelling the LLA and having a new major shareholder in FGV.
Wilmar International Ltd cofounder Martua Sitorus, who already owns a three per cent stake in FGV, may emerge as a new major shareholder.
It was reported that Felda was seeking the return of the land it had leased to FGV in 2012 in a bid to extract higher returns.
Under the LLA, FGV pays Felda RM250 million annually for 20 years and as well as a 15 per cent share of FGV’s annual profitS from the LLA-related land.
On the cancellation of the LLA, the source said FGV would face earnings pressure over the long term from the loss of the plantations.
“However, FGV will still be able to buy fresh fruit bunches from Felda, other smallholders and third parties and make money from the sale of crude palm oil.”
With its own 500,000ha plantations, FGV could still survive and buy other plantations, added the source.
An exhibition highlighting Felda Ventures Holdings Bhd’s (FGV) oil palm research. FGV can still buy fresh fruit bunches from Felda, other smallholders and third parties and make money from the sale of crude palm oil.