KLK, via its subsidiary PT. Steelindo Wahana Perkasa (SWP), has entered into agreements to acquire 95% of the issued and paid-up share capital of PT. Bumi Makmur Sejahtera Jaya (PT BMS) for a total cash consideration of Rp6.7b (or RM2.3m). Through 2 conditional agreements (the S&Ps), SWP will acquire a 94% equity stake in PT BMS from Tjong Hasan Agus Salim and another 1% from Tjhang Ardy Fadrinata respectively. The Proposed Acquisition will result in PT BMS becoming a subsidiary of KLK.
Buying a small adjacent landbank in Indonesia. The proposed acquisition will add 2,336.62 hectares to its current landbank of 245,905 hectares (54% in Indonesia). The acquisition is strategic because it is adjacent to KLK's plantation in Belitung Island.
Valued at US$274/hectare. Based on the total consideration of RM2.3m, the proposed land with izin lokasi (location permit) is valued at US$274/hectare, which is a fair value for the current market value range of US$250-US$300/hectare.
The purchase consideration will be financed by internally-generated funds. As at end-Mar 09, KLK had total cash of RM1.3b, which can be utilised to finance this transaction.
The proposed acquisition is expected to be completed in the 1Q10. The landbank can potentially bring in additional operating profit of RM2.1m to KLK, assuming CPO price of RM2,000/tonne and cost of production of RM1,1,00. The acquisition will not have an impact on earnings in the immediate term, but will add to KLK's unplanted reserve of 38,502 hectares (@ end-Sep 08).
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Friday, July 17, 2009
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