ENSTEK, Negri Sembilan: FEDERAL Land Development Authority (Felda) seems to be serious about taking back the plantation land it leased out to Felda Global Ventures Holdings Bhd (FGV).
This follows FGV president and chief executive officer Datuk Zakaria Arshad’s statement that both parties have been in talks on the possible termination of the land lease agreement (LLA) for more than a month.
Yesterday, Zakaria said the LLA termination is one of the revamp options to unlock FGV’s value as well as address Felda’s cash flow issue.
He hinted that more restructuring exercises are on the cards.
“We are considering a few major revamp options but cannot reveal them yet. These options will cover all three interests including Felda, other stakeholders and FGV,” he told reporters in Bandar Enstek yesterday.
FGV is awaiting its next discussion with Felda on the revamp options for both parties’ interests, Zakaria added.
He, however, stressed that terminating the LLA is a last resort.
Under the LLA, FGV must bear the cost of replanting to improve its landbank’s age profile of around 15.8 years old. It also has to pay Felda RM250 million annually for 20 years plus 15 per cent share of FGV’s annual profits from the LLA-related land.
Zakaria said FGV is open to the idea of having Wilmar International co-founder Martua Sitorus and PT Eagle High Plantations Tbk’s major owner, Tan Sri Peter Sondakh, as FGV’s major shareholders.
“Martua is very experienced in the trading of palm oil and Eagle High is parked under Felda. If they want to be associated with FGV, it is okay. Like I said previously, whoever has the expertise and wants to take up equity stakes in FGV, we welcome it.”
It was reported that the potential new shareholders may inject their plantation assets into FGV in exchange for an issuance of 25 per cent new equity stake. Alternatively, they may acquire the targeted equity stake from Felda.
Investors did not respond warmly to reports of the two possible revamps. Yesterday, FGV fell again to close at RM1.94, while on Tuesday, the stock eased 8.45 per cent to RM1.95 from Friday’s close of RM2.13.