Bid to sell largest Malaysian paper firm comes unstuck

forest

MUMBAI: Ballarpur Industries Ltd (Bilt) has scrapped a deal to sell loss-making Malaysian unit Sabah Forest Industries Sdn Bhd (SFI) to Pandawa Sakti (Sabah) Sdn Bhd, Malaysia for USD500 million.

The deal came unstuck as the buyer could not meet the deadline to sew the transaction despite multiple extensions, according to a report in financial website vccircle.com.

Bilt, India’s largest paper company, said it would invoke the USD50 million guarantee given as an advance by the buyer.

The firm had signed an agreement to sell its entire stake of 98.08 per cent in SFI, the largest Malaysian paper firm, last September.

The deal was originally expected to close within three months. The deadline was extended to February, then April, and then to May. Both parties then decided on a final deadline of June 30, said the report.

Bilt had earlier said it intended to use the proceeds from the sale to reduce debt of SFI and other Bilt units. SFI was to be sold on a debt-free, cash-free basis.

Bilt had acquired SFI in 2007 for USD261 million, marking the first significant overseas acquisition by an Indian paper company, said the vccircle report.

SFI makes paper and paper-related products. It also offers solid wood-related products such as rough and chemically treated sawn timber and panel-based products including dried veneer and raw plywood. It exports to Iran, Syria, Yemen, South Africa, Jordan and Saudi Arabia.

The vccircle report said Bilt’s parent, Avantha Group, facing a debt overhang, had divested several assets in the recent past.