KUALA LUMPUR: The sale of 33% of Boustead Plantations Bhd’s (BPlant) shares to plantation group Kuala Lumpur Kepong Bhd (KLK) does not mean the entire company has been sold, says defence minister Mohamad Hasan.
Mohamad, also known as Tok Mat, said the Armed Forces Fund Board (LTAT) was selling the shares to address cash flow issues and settle Boustead’s debt by the end of 2023 to prevent going into bankruptcy.
“This strategic collaboration also has the potential to create significant added value for LTAT and Boustead because they are granted priority rights to develop two plots of land covering approximately 1,800 acres (about 728ha) with a gross development value (GDV) of around RM8 billion,” he said in his winding-up speech for the 12th Malaysia Plan (12MP) mid-term review at the Dewan Rakyat.
Mohamad said BPlant’s recent profits had been largely derived from the sale of plantations and a notable surge in crude palm oil prices.
“Therefore, BPlant requires stronger financial resources and a stable financial position to initiate replanting,” he said.
“This is due to the fact that nearly 49% of BPlant’s oil palm trees are over 20 years old and have recorded the lowest fresh fruit bunches yield (of 13.3 tonnes per hectare) compared to other oil palm companies.”
Last Tuesday, Wan Ahmad Fayhsal Wan Ahmad Kamal (PN-Machang) questioned why the shares were not sold to Sime Darby Bhd or Permodalan Nasional Bhd (PNB) instead, if the government was committed to empowering Bumiputera equity ownership, as outlined in the 12MP.
“Apart from the sale of BPlant’s assets and shares amounting to RM1.15 billion, we will also lose 241,000 acres of land that can be used for real estate development and other (development projects),” the Bersatu MP said while debating the mid-term review of the 12MP.
The day before, KLK had signed a letter of agreement with BHB and LTAT to set the cut-off date for a strategic collaboration agreement (SCA) on Sept 22 or any other date that they might mutually agree upon in writing.
In response, Mohamad said 15 invitations were extended to entities with a background in plantation, such as Sime Darby Bhd and FGV Bhd. However, many declined to participate.
“Tradewinds Corp did participate, but their proposed bid was very low. Boustead needs to settle a debt of (almost) RM800 million by the end of this year and RM1.7 billion to redeem medium-term notes,” he said.
Despite that, Mohamad said his ministry would engage in discussions with the finance ministry to identify the most suitable course of action to assist Boustead, as the situation directly impacts LTAT.
“(This is because) LTAT has invested 50% of its funds into Boustead, and this isn’t a favourable situation because LTAT is also a retirement fund for the armed forces,” he added.