Boustead to buy Sabah oil palm land for RM397mil
PETALING JAYA: Boustead Plantations Bhd (BPB) has proposed to buy 12,145 acres of oil palm plantation land in Sabah for RM397mil cash.
In its filings with Bursa Malaysia, BPB said its wholly owned subsidiary – Boustead Rimba Nilai Sdn Bhd – had signed a sale and purchase agreement with 12 parties for the acquisition of oil palm plantation land comprising 17 land titles, together with a 75-tonne-per-hour palm oil mill and buildings erected thereon.
Upon completion of the acquisi- tion, BPB’s total plantation land bank would increase by 5% to 98,300ha, or 242,905 acres, representing a 6% increase in the total planted area to 79,400ha, or 196,202 acres.
“This latest proposed acquisition represents a viable opportunity for the group to replace its disposals in Peninsular Malaysia with sizeable plantation land in Sabah at a lower cost, in line with its long-term strategy to expand its plantation land bank,” a BPB spokesperson said.
“Moreover, the land is located within close proximity to BPB’s existing Sabah estates, which would enable the group to achieve greater economies of scale and operational efficiencies, as well as strengthen the group’s market presence in Sabah.
The proposed acquisition also includes a palm oil mill, which will reduce capital expenditure for the group on the construction cost of a new mill,” the spokesperson added.
The spokesperson said BPB planned to scale up the capacity of the mill from 75 tonnes per hour to 90 tonnes per hour.
According to BPB, the purchase consideration represented a premium of RM3.7mil, or 0.94%, over the market value of the plantation assets of RM393.3mil, excluding a workshop and building materials located on one of the parcels of the plantation land.
The group said the proposed acquisition would be financed via internally generated funds (RM47mil) and bank borrowings (RM350mil).
The proposed acquisition is expected to be completed by the first quarter of 2019, subject to completion of the conditions precedent.