Priceworth shareholders approve FMU5 acqusition

KOTA KINABALU: Shareholders of Priceworth International Bhd have unanimously approved the proposed acquisition of Forest Management Unit 5 (FMU5), a sustainable forest management concession in Sabah for RM260 million which has been valued at RM433.8 million by an Independent Firm of Valuers.

Shareholders at the Extraordinary General Meeting held here yesterday approved the RM260 million acquisition by Priceworth’s wholly-owned subsidiary GSR Pte Ltd of Rumpun Capaian Sdn Bhd, which holds the timber extraction and replanting rights to FMU5 covering 88,820 ha of commercial Class II forest in Sabah’s Trus Madi forest reserve.

Rumpun Capaian holds the rights to FMU5, which has 79 years remaining under the Sustainable Forest Management Licence Agreement awarded in 1997, through its wholly-owned subsidiary Anika Desiran Sdn Bhd.

Shareholders also approved the proposed renounceable twofor-one rights issue with bonus shares. Priced at five sen a share, the rights issue will come with one bonus share for every two rights shares subscribed.

On 18 May 2018, PWI announced the appointment of Am Investment Bank Bhd, RHB Investment Bank Bhd, Mercury Securities Sdn Bhd, MIDF Amanah Investment Bhd and Kenanga Investment Bank Bhd as underwriters for its RM102.37 million proposed rights issue which is part of its exercise to acquire Forest Management Unit No 5 (FMU5).

“This is a significant milestone. The Rights Issue exercise degears PWI as a precursor to the SGX IPO and put PWI in a solid financial footing. We are one step closer to cementing Priceworth’s position as the leading integrated timber player in Sabah. This transformative acquisition will secure a sustainable supply of logs for Priceworth for the foreseeable future,” said executive director Richard Koo yesterday.

“We are bullish on the future outlook of the Company and the Group, as a sustainable supply of logs will enable us to improve productivity and boost our margins,” he added.

The group saw its first half net profit more than triple on rising contribution from operations in FMU5, to RM4.78 million following a 32.5 percent jump in revenue to RM89.3 million. In April, Priceworth’s log production hit a new high of 32,800 cubic metres, its highest since 2011 after Sabah adopted a new sustainable forestry policy.

Additionally, apart from exporting of round logs to China and India, premium plywood to Japan, the timber group also signed a Memorandum of Understanding (MOU) to supply Container Flooring (new product) totaling RM600 million over a five-year period averaging RM120 million per annum to Chinese manufacturer Foshan Zhengsen Woodworking Co which has been made possible due to the supply of timber from FMU 5.

Priceworth is also planning an initial public offer (IPO) of GSR on the Singapore Exchange (SGX), and has appointed UOB Kay Hian as the principal advisor.