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

New Straits Times - - Front Page - ZAIDI ISHAM IS­MAIL KUALA LUMPUR xydee@me­di­aprima.com.my

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.

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