PUTRAJAYA: IOI Corporation Bhd plans to set up a second plant in the East Coast of the US to expand its existing businesses there, apart from its Chicago plant as part of its expansion drive. “We are in the middle of negotiating to purchase the land. Geographically, it has to be in the right position, as logistics costs are concerns to us,” said its group executive director Datuk Lee Yeow Chor. Presently, IOI Corp has a plant in Chicago to produce fats for food ingredients manufacturers with a capacity of 200,000 tonnes annually. With the second plant being planned, Lee said it would increase the total capacity in the US to 400,000 tonnes annually. He said IOI Corp was eyeing the East Coast to set up the new plant because it has the second highest concentration of food ingredient manufacturers, after Chicago. However, he added that the group would also target to expand their operations in the West Coast in the future. On IOI Corp operations, Lee said the group was on an acquisition trail, with an appetite for more lands for its plantation and property development divisions, as well as stakes in other companies, other than expanding its plants both locally and overseas, as part of its strategy for group expansion. The group, which had recently acquired several Indonesia-based palm oil plantation companies for RM289 million, was raising funds to finance its acquisition activities, via the issuance of convertible bonds. IOI Corp had issued two convertible bonds previously, raising a total of US$720 million (RM2.38 billion). Speaking to reporters after the company’s EGM here yesterday, its group executive chairman Tan Sri Datuk Lee Shin Cheng said: “Continuous acquisition is one of our agendas. I am interested in everything, as far as business is concerned.” At the company EGM, shareholders approved the up to US$600 million convertible bonds issue by its wholly owned subsidiary IOI Resources (L) Bhd. Lee said: “We raise funds not only for expansion, but also for acquisition. We are looking at buying more land here or in other countries.” However, IOI Corp had not targeted to make any acquisitions yet, he said, adding that the funds raised from the bonds issuance would be on a standby mode, in the event any acquisitions cropped up. Meanwhile, Lee dismissed reports that IOI Corp was acquiring a substantial stake in Unico-Desa Plantations Bhd as rumours, and said he had not received any propositions from the latter regarding the stake sale. He said: “I have not received any offers, but if the opportunity arises and the offer is reasonable, I will consider it.” It was reported in October that IOI Corp was seeking its board’s approval to buy a substantial stake in Unico-Desa, as part of its plan to grow its plantation business. Lee added that the group also did not intend to privatise its property development arm IOI Properties Bhd for the moment, contrary to analysts’ reports. The group was also finalising plans to expand its operations in Johor, which would concentrate on creating value-added products. Lee Shin Cheng said: “Currently, we have three businesses in Pasir Gudang — refinery, specialty fats and oleochemical — and we want to make use of our unique position to create a synergy between these businesses, to come up with value-added products.” He added that the group expected its profitability to be enhanced by the second half of fiscal year 2009, following the completion of its acquisition of plantation lands in Indonesia. On the possibility of the government revoking licences among companies that did not use them to produce biofuel, Lee Shin Cheng said it would not affect IOI Corp’s businesses. He added that the group had not embarked on producing biodiesel, as it was not profitable, due to high crude palm oil (CPO) prices. “It is still difficult to convert CPO into biodiesel because of the high prices, and it might even increase again next year,” he said.
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