In a statement today, KLK said it has signed a tripartite strategic collaboration agreement (SCA) with the Armed Forces Fund Board (LTAT) and its wholly-owned subsidiary Boustead Holdings Bhd (BHB), to undertake a mandatory take-over offer to acquire all the remaining shares of BPlant they do not already own at a cash offer price of RM1.55 per share.
At present, BHB holds a 57.42% stake in BPlant while LTAT holds a 10.59% stake, for a combined 68% share in the plantation company.
According to a report in The Edge, KLK plans to take BPlant private after the conclusion of the mandatory general offer (MGO). However, the joint statement by the three parties did not address this issue.
The partners said the strategic collaboration with KLK is to enhance the long-term operational efficiencies and crude palm oil yields of BPlant’s plantations for the mutual benefit of the parties.
“This collaboration is expected to contribute positively to BPlant’s financial position over the long term,” the statement said.
As part of the value creation exercise under the SCA, BHB and LTAT are granted the first right of refusal to deal with two estates, namely Balau and Bukit Mertajam (Mayfield Division) estates, with a total acreage of approximately 1,800 acres, for the purpose of development of the land.
LTAT CEO Nazim Rahman said this timely strategic collaboration marks the beginning of the “reset strategy” for BHB, which will result in significant value enhancement to the Group.
LTAT remains steadfast at realising its MAMPAN25 Strategic Plan 2023-2025 through a robust portfolio rebalancing exercise with a clear mission of advancing the socio-economic well-being of the armed forces and veterans, he said.
“We firmly believe this strategic collaboration with its synergies will unlock greater value for all stakeholders within the business value chain. We are confident this will put both BHB and LTAT on a firm footing towards a sustainable future,” he added in the statement.
KLK CEO Lee Oi Hian said the collaboration will not only strengthen the existing co-operation between KLK and BHB, but it provides a major boost to the long-term growth strategy of KLK Group’s plantation business.
“We are optimistic this corporate exercise will bring positive benefit for Malaysia’s palm oil industry as a whole,” he added.
Boustead Plantations has 42 operating oil palm estates, including 16 estates in Peninsular Malaysia, as well as 26 in Sabah and Sarawak, and 10 palm oil mills, comprising three mills in Peninsular Malaysia, five in Sabah and two in Sarawak.
The stake sale comes on the heels of the privatisation of BHB by LTAT two months ago. BPlant’s share price has rebounded strongly from a low of 64 sen on June 8. It has more than doubled since to RM1.37 yesterday, valuing the group at RM3.07 billion. Trading of its shares were suspended from this morning.
Boustead Plantations’ net profit for the first quarter ended March 31 (Q1 FY2023) dropped a staggering 99% year-on-year (y-o-y) to RM5.2 million from RM435.2 million due to lower palm product prices and the adverse impact of fresh fruit bunches valuation.
As for FY2022, the group recorded a much stronger financial performance, posting RM595.3 million in net profit. This was 2.5 times higher than the previous year’s net profit of RM241.3 million.
At 3.15pm, KLK’s shares were down 24 sen or 1.07% at RM22.26 with a market capitalisation of RM24.06 billion.