Far East buys oil palm estate from Harn Len

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PETALING JAYA: Far East Holdings Bhd has entered into a RM182.99mil deal with another listed company – Harn Len Corp Bhd – to acquire an oil palm estate in Rompin, Pahang.

Far East said the exercise is in line with its expansion plan, and would broaden its core income base through increased plantation acreage at a reasonable cost and at a strategic location.

“The proposed acquisition demonstrates the board’s initiative in pursuing continued growth and sustainability of the business,” it said in a filing with Bursa Malaysia.

It added that the move is expected to expand its development activities and contribute positively to its future prospects and earnings.

The group said it expected to fund the acquisition via a combination of internally generated funds and bank borrowings.

Far East yesterday inked a sale and purchase agreement with Harn Len to buy 2,134ha of leasehold land planted with oil palm trees, together with all buildings and structures including a palm oil mill known as the Lian Hup Oil Palm Estate.

In the filing, it said the purchase price was derived at the rate of RM32,000 per acre, and the mill, which is valued at RM15mil.

The price, it said, was arrived at after taking into consideration the potential appreciation in the value of the parcels of land, the development and infrastructure already in place, and other competing offers.

Harn Len’s original cost of investment was RM16.2mil, in the financial year ended Dec 31, 2004.

The land and the mill had been offered by open tender by Harn Len, and Far East was the highest bidder.

In its filing with the stock exchange, Harn Len said the proposed disposal provided an opportunity for it to unlock and realise the value of its investment in the assets.

Post-completion of the disposal, it said, the group still owned 12,833ha (including 3,888.03ha held under joint-venture arrangements) and 2,116.31ha of oil palm estates in Sarawak and Pahang, respectively.

As at Dec 31, 2018, the group had outstanding creditors amounting to RM122.4mil.

“The proceeds from the proposed disposal will enable the group to repay a substantial portion of debts due to these creditors.

“With the balance proceeds, the group will be able to continue to fund the working capital and initiatives to improve the yield of its remaining oil palm plantation and purchase more fresh fruit bunches to increase the production of its palm oil mill,” it said.

It added that it expected to record a gain on disposal of about RM117.3mil.