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16th December 2015

Publication on The Edge Markets – United Malacca to acquire 83% stake in Indonesian planter for RM285M

KUALA LUMPUR (Dec 15): United Malacca Bhd (UMB) has proposed to acquire an 83% effective equity interest in Indonesia­based PT Lifere Agro Kapuas (LAK), via the acquisition of 793,837 ordinary shares or 88.2% in International Natural Resources Pte Ltd (INR) from Lincoln Wilshire Investments Ltd (LWIL) for US$66.4 million (RM285.02 million, based on US$1 = RM4.2925).
INR holds approximately 94.1% equity interest in LAK, which has obtained a plantation license over approximately 24.59 ha of oil palm plantation located in Mantangai district, Kapuas Barat district, Dadahup district and Kapuas Murung district in the Kapuas Regency, Kalimantan Tengah, Indonesia (collectively known as the plantation land).
It also has in hand, a location permit over 350 ha of land for refinery and bulking station in the Kapuas Kuala district of Kapuas Regency, also in Kalimantan Tengah, Indonesia (the refinery land).
“The proposed acquisition is in line with UMB’s long term strategy to increase its interest in the palm oil industry and to focus its financial resources in further expanding its plantation operations, both domestically and regionally.
“The proposed acquisition represents another positive step by UMB group towards realising its vision of establishing the group as one of the major players in the plantation industry,” said the company in a filing with the exchange.
With the completion of the acquisition, UMB’s total plantation landbank will more than double to 48,695 ha, from the current 24,110 ha
The exercise will also accelerate its upstream expansion, as some 10,366 ha have already been planted, with about 10,140 ha aged less than five years.
It added that the total mature area of the plantation land as of Oct 2014 is about 226 ha, accounting for 1.3% of the total plantable area under the plantation land.
“As such, with a fairly young crop profile, the proposed acquisition is expected to contribute positively to the earnings, as well as shareholders’ value of the group in the future, as the plantation[s] mature and reach their prime age,” said UMB.
The company has secured a term loan of up to US$50 million from OCBC Bank (Malaysia) Bhd to finance the purchase consideration, with the balance to be funded by internallygenerated funds.
It expects to complete the acquisition by the first quarter of 2016.
UMB closed one sen or 0.17% higher at RM5.86 today, bringing its market capitalisation to RM1.22 billion.
(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
Author: Ahmad Naqib Idris