FGV probing Asian Plantations deal
THE board of FGV Holdings Bhd is said to be looking into the group’s investment in London-listed Asian Plantations Ltd (APL) that was acquired back in 2014.
Towards this end, key officials of the company, including former directors and management of FGV, have been queried on APL’s hefty price tag of more than RM1.1bil that was approved.
Sources say that the current management of FGV had issued official letters to the previous board members and management team led by former chairman, Tan Sri Isa Samad as well as former group president/CEO Mohd Emir Mavani Abdullah, questioning them on the APL purchase.
“Instead of (the previous board) just rubber stamping, more thorough due dilligence work should have been done prior to making the APL acquisition.
“They are also aware of an external independent report, which is not in favour of the said purchase,” a source adds.
Currently, FGV is also conducting a series of investigations involving six transactions and/or investment decisions, which began in January this year. Some of the investigations include past overseas transactions.
But in the case of APL, FGV is taking it to the next level by using both domestic and international resources for the forensic investigation.
In June, FGV hired a London-based legal firm to handle the matter, particularly on the land valuation aspect.
So far, there is no update by FGV on the status of the investigation.
Nonetheless, FGV chairman and interim CEO Datuk Wira Azhar Abdul Hamid was reported as saying that some areas of APL’s estates could not be used for planting oil palm based on his personalvisit to the plantation.
Furthermore, there is a “hearsay information” that some part of the land does not belong to APL, thus making it a serious cause for concern by the current management of FGV.
Azhar was also quoted as saying that the independent investigation would also verify whether the group’s employees were the culprits of the resulted situation related to APL.
“This is a serious matter, but we cannot accuse (them) as the investigations are still ongoing. Therefore, we have to be thorough in our verification. FGV even paid around RM1.1bil for its investments in APL,” he told reporters in a media briefing in June.
In 2014, FGV acquired Singaporeincorporated APL for a total cash consideration of RM628mil and also, assumed its liabilities of RM388mil. This sum resulted in FGV forking out slightly over RM1bil for the acquisition, after a voluntary conditional cash offer of £2.20 per share — a premium of about 294.7% over APL’s net asset value per share as at Dec 31, 2013.
APL has 24,622ha of oil palm plantations located around Miri and Bintulu in Sarawak.
During the tenureship of Isa Samad and Emir Mavani in FGV from January 2013 until March 2016, the plantation company went on an acquisition binge, completing seven transactions worth RM4bil.
Among the plantations purchased were Pontian United Plantations Bhd, APL and Golden Land Bhd.
When Azhar came on board in September last year, his main goals were to clean up the “unproductive and inefficient” operational issues, which had bogged down the group’s performance.
During his interview with StarBizWeek in September, he pointed out the track record of FGV in the past five years had been disappointing and marred by weak leadership, breach of authorities limit, unwise investment decisions and failure to boost the efficiency of its existing core plantation operations.
In the latest developments, several dubious investment transactions under past management are subject to forensic audits and internal investigations.
This could lead to several current and former top management officials being charged and possibly put to trial in the near future.
FGV is now saddled with a debt of about RM5.48bil, of which the long term liabilities are worth RM2.22bil while its cash in the kitty is about RM1.5bil.
It posted a net loss of RM23.23mil in the second quarter ended June 30, with a lower revenue of RM3.44bil.