Boustead Plantations Bhd (BPB) announced the proposed acquisition of 42 parcels of plantation land in Sabah, amounting to a total of approximately 11,600 hectares.
The Group issued a letter of intent (LOI) to Pertama Land & Development Sdn Bhd for the proposed acquisition of the land, located within the district of Labuk and Sugut, Sabah, for an indicative cash consideration of RM750 million.
Following the acceptance of the LOI by Pertama Land & Development Sdn Bhd, the Group will conduct a due diligence exercise within a period of 30 days.
Tan Sri Lodin Wok Kamaruddin, Vice Chairman, BPB, said, “This is indeed an ideal opportunity to expand our land bank with viable plantation land to complement our existing operations in Sabah. We are excited about the potential value that this sizeable land acquisition will bring to the Group, as part of our ongoing strategy to strengthen our earnings potential and enhance our prospects. We look forward to moving ahead with this corporate exercise.”
In a separate announcement, the Group approved a variation to the utilisation of its Initial Public Offering (IPO) proceeds, in conjunction with its listing on the Main Market of Bursa Malaysia Securities Berhad on 26 June 2014. The Group raised total gross proceeds of RM928 million through its IPO, of which RM420 million was allocated for the acquisition of plantation lands. As disclosed in its prospectus, if the total amount allocated was not utilised within 36 months from the Group’s listing, the unutilised amount would go towards repayment of the Group’s existing bank borrowings.
To date, the Group has utilised RM63.8 million of the IPO proceeds to acquire beneficial interests in plantation lands in Sugut, Sabah. As such, the Group will reallocate the balance of RM356.2 million towards part or full repayment of bank borrowings for past acquisitions of plantation lands.
Should the Group’s proposed acquisition of approximately 11,600 ha of plantation land in Sabah materialise, the payment of the purchase consideration is expected to be made in 2018 upon completion of the exercise, which will then be funded by internally generated funds and/or bank borrowings.