1. INTRODUCTION
The Board of Directors of Felda Global Ventures Holdings Berhad (“FGV”) is pleased to announce that FGVK, a wholly owned subsidiary of FGV, had on 9 July 2013, entered into a Conditional Sale and Purchase of Shares Agreement (“CSPA LBP”) to acquire 285 shares of Rp1,000,000 each held collectively by the Sellers in the share capital of PT. Landak Bhakti Palma (“LBP”) (“LBP Sale Shares”), representing 95% of the total issued and fully paid-up share capital of LBP, from the existing shareholders of LBP namely Lidya, Timotius Sintrajaya and Joko Sintra Jaya (hereinafter referred to as the “Sellers”), all of whom are Indonesian citizens, for a total purchase consideration of RM18,302,700 (“Purchase Consideration”)(“Proposed LBP Acquisition”).
LBP holds an Izin Lokasi for 12,844 hectares of land in Nanga Mahap, Sekadau, West Kalimantan, Indonesia.
Upon completion of the Proposed LBP Acquisition, LBP will become a 95% owned subsidiary of FGVK.
2. DETAILS OF THE PROPOSED LBP ACQUISITION
2.1 Details of the Proposed LBP Acquisition
The Proposed LBP Acquisition involves the acquisition of the LBP Sale Shares, free from all liens, charges, encumbrances, and with all rights, benefits and entitlements now and thereafter attached thereto.
2.1.1 Statutory Information of LBP
LBP was established in the Republic of Indonesia as a limited liability company on 28 September 2010 with an authorized share capital of Rp500,000,000 divided into 500 shares of Rp1,000,000 each (“LBP Shares”), of which 300 LBP Shares have been issued and fully paid-up.
The existing shareholders of LBP as at 30 June 2013 are as follows:
Joko Sintra Jaya will hold 5% equity interest in LBP after the PT LBP acquisition is completed.
LBP is currently a dormant company.
2.1.2 Plantation Information of LBP
LBP had obtained a Plantation Location Permit (Izin Lokasi) on 1 April 2013 to allow LBP to operate a rubber plantation on approximately 12,844 hectares of land in Kecamatan Nanga Mahap Kabupaten, Sekadau Province, in West Kalimantan (“the LBP Land”). Further details of the LBP Land are set out in Table 1 of this announcement.
2.1.3 Justification and Basis of Arriving at the Purchase Consideration
The Purchase Consideration for the Proposed LBP Acquisition was derived based on a willing buyer-willing seller basis after taking into consideration the market value of the underlying asset of LBP.
2.1.4 Salient Terms of the CSPA LBP
The salient terms of the CSPA LBP are as follows:
2.1.4.1 The Purchase Consideration (“Total Consideration”) shall be payable by the FGVK to the Sellers in the following manner:
(a) 20% of the total consideration shall be paid to the Sellers within 14 (fourteen) days as of the date of this Agreement;
(b) 15% of the total consideration shall be paid to the Sellers within 14 (fourteen) days as of the acceptance of confirmation from the Purchaser’s solicitors on the satisfaction of certain conditions precedent;
(c) 15% of total consideration shall be paid to the Sellers within 14 (fourteen) days as of the acceptance of confirmation from the Purchaser’s solicitors on the satisfaction of certain conditions precedent;
(d) 15% of total consideration shall be paid to the Sellers within 14 (fourteen) days of the completion date;
(e) 30% of the total consideration shall be paid to the Sellers within 14 (fourteen) days of approval from MOLHR;
(f) 5% of total consideration shall be paid to the Sellers within 14 (fourteen) days post completion.
2.1.4.2 The Proposed LBP Acquisition is subject to conditions precedents to be fulfilled, which include, amongst others:
(a) Relevant corporate and individual approvals required pursuant to the constitutional documents of PTLBP and FGVK;
(b) The approval from the following local authorities:
(i) The Ministry of Law and Human Rights;
(ii) The Indonesian Capital Investment Coordinating Board;
(iii) The Indonesian Business Competition Supervisory Board;
(iv) The Indonesian Land Agency;
(v) The Indonesian Ministry of Agriculture;
(c) Other approvals from third party (as and when applicable)
Upon completion of all the conditions precedents stipulated in the Agreement, FGVK or its nominee will become the substantial shareholder of PT LBP.
2.2 Source of Funding
The Purchase Consideration for the Proposed LBP Acquisition will be funded from initial public offering (“IPO”) proceeds allocated for acquisition of plantation assets as disclosed in FGV’s IPO Prospectus dated 31 May 2012.
2.3 Liabilities to be Assumed
There are no liabilities, including contingent liabilities and guarantees to be assumed by FGVK pursuant to the Proposed LBP Acquisition.
3. RATIONALE FOR THE PROPOSED LBP ACQUISITION
i) The Proposed LBP Acquisition is consistent with FGV’s long-term business plans to expand the Group’s land bank in Indonesia.
ii) The outcome of the due diligence exercise was satisfactory and LBP Land is suitable for rubber development.
iii) The Proposed LBP Acquisition is expected to enhance the future earnings and shareholders’ value of FGV.
4. PROSPECTS
The Group is of the view that the future prospect of LBP is favourable given the positive long term of the rubber industry. LBP is expected to contribute positively to the future earnings of FGV.
5. RISK FACTORS
The Proposed LBP Acquisition is expected to expand the business activities of the FGV Group. However, there are certain business risks inherent in the rubber industry. These business risks may include, but are not limited to, external risks such as fluctuations in natural rubber price, changes in the world demand for rubber, threat of substitutes for natural rubber, weather conditions, and changes in general economic and business conditions as well as internal risks such as pest and diseases, constraints of labour supply for their plantation operations, and the rising costs of raw materials.
6. FINANCIAL EFFECT OF THE PROPOSED LBP ACQUISITIONS
The Proposed LBP Acquisition is not expected to have significant effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding in FGV for the current year ending 31 December 2013.
7. APPROVALS REQUIRED
The Proposed LBP Acquisition is not subject to the approval of the shareholders of FGV or any other relevant authorities in Malaysia. However, the Proposed LBP Acquisition is subject to such approvals as may be required under the laws of Republic of Indonesia.
8. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST
None of the Directors and major shareholders of FGV and/or persons connected with them have interests, direct or indirect, in the Proposed LBP Acquisition.
9. ESTIMATED TIMEFRAME FOR COMPLETION
Barring any unforeseen circumstances the Proposed LBP Acquisition is expected to be completed in the fourth quarter of the financial year ending 31 December 2013.
10. DOCUMENTS FOR INSPECTION
A copy of the CSPA LBP is available for inspection at the registered office of FGV from Mondays to Fridays (except public holidays) during normal business hours, for a period of three (3) months, following the date of this announcement.
This Announcement is dated 9 July 2013.
TABLE 1
a. Location and details of the LBP Land
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| 12,844 of Izin Lokasi Nomor : 593.41/121/Ekon/2013
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| Kecamatan Nanga Mahap Kabupaten Sekadau Provinsi Kalimantan Barat
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| 36 months from date of Izin Lokasi granted which was 1 April 2013
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