IOI Corp buys oil palm firms for RM289m

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19 Sept 2007

KUALA LUMPUR: IOI Corporation Bhd (IOI Corp) is acquiring several Indonesia-based oil palm plantation companies for a total of nearly US$90 million (RM289 million) as part of the group’s strategy to grow its core palm oil business under appropriate conditions.

It had entered into agreements to acquire Singapore-based investment holding companies Lynwood Capital Resources Pte Ltd and Oakridge Investments Pte Ltd from Ivygate International Ltd and Red Canyon Enterprise Ltd, and Oleander Capital Resources Pte Ltd from Goldharvest Group Holdings Ltd, for US$62.63 million and US$20.3 million respectively.

The deal will also see IOI Corp owning 33% of PT Bumitama Gunajaya Agro (BGA), and 67% each in PT Agro Mandiri Sejahtera, PT Ketapang Sawit Lestari, PT Bumi Sawit Sejahtera, PT Kalimantan Prima Agro Mandiri, PT Berkat Nabati Sejahtera and PT Sukeses Karya Sawit. Under the agreement, IOI Corp will repay US$9.6 million on behalf of BGA, owing to Ivygate and Red Canyon.

The proposed acquisition, which will be completed in the last quarter of 2007, will be funded by existing cash reserves and borrowings.

In a statement released yesterday, it said BGA has a total planted area of about 35,300ha and unplanted land of about 64,500ha, as well as three oil mills. It also oversees a plasma scheme of about 21,800ha.

The second deal would provide a 52,700ha piece of land for planting excluding areas allocated for plasma schemes.

It said IOI Corp would provide plantation management, agronomy and related technical support services to achieve better efficiency and cost effectiveness, while the remaining shareholders would be responsible for human resource and regulatory matters, which included the procurement of issuance of relevant land titles.

It said expanding the plantation business in the country had became more difficult due to scarcity of plantation land, adding that Indonesia’s proximity to the country was ideal for the group’s plantation expansion overseas.