TALKS to sell stakes in Felda Global Ventures Holdings Bhd (FGVH) to two Indonesian billionaires have been suspended due to a management crisis at the world’s third-biggest palm plantation group, sources close to the deal said.

Martua Sitorus and Peter Sondakh, two of Indonesia’s richest men, were in advanced discussions with FGVH and its controlling shareholder — state-owned palm planter Federal Land Development Authority (Felda) — to buy the equity stakes, the sources said.

But the talks have ground to a halt following a boardroom tussle and corruption claims at FGVH that led to CEO Datuk Zakaria Arshad’s suspension and the resignation of chairman Tan Sri Mohd Isa Abdul Samad last month, the sources said yesterday.

“It’s clear when you have the two top executives of a public listed company suspended, surely you wouldn’t move beyond its daily operations,” said a source with direct knowledge of the matter.

It was not immediately clear if or when talks on the stake sale will resume and if or when Zakaria’s suspension would end.

A deal could have boosted FGVH’s finances and given it a chance to reverse at least some of the 70% declines seen in its share price since its initial public offering (IPO) in 2012.

The stalling of the potential deal is a setback for Prime Minister Datuk Seri Mohd Najib Razak, who is racing against time to appease FGVH’s shareholders — a key vote base — before general elections that could be called as early as this year.

FGVH’s shareholders — a chunk of whom are settlers — have been hit hard by the share drop, worsening financial performance of Felda and FGVH and delayed payments.

An FGVH spokesman said the company cannot comment on the matter. Sitorus’ office did not immediately respond to a request for comment.

Satrio Tjai, MD of Sondakh’s Rajawali Group, said he had not heard about these discussions. The sources did not want to be named as they were not authorised to talk to the media.

Sitorus is the co-founder of Singapore-listed Wilmar International Ltd, the world’s largest palm oil processor, while Sondakh controls plantation-to-mining conglomerate Rajawali.

Under the planned deal, FGVH would first take over Indonesian palm plantation assets of Sitorus and Sondakh and pay for it through significant stakes in the enlarged FGVH, the sources said.

Felda and Sitorus would hold about 25%-30% each, while Sondakh would own 16%.

Felda would also take back the land it had leased to FGVH before the latter’s IPO in 2012, paying about RM4 billion in cash, one of the sources said.

Eventually Sitorus will helm FGVH, which at the completion of the deal would be a company with mostly Indonesian assets.

“FGVH would essentially be upstream Indonesian assets,” said a banking source familiar with the discussions.

According to the first source, the company is also open to others who may be interested in an FGVH stake.

Sondakh — who has long-standing ties to Najib — had tried to sell to FGVH a stake in his palm oil firm PT Eagle High Plantations Tbk in June 2015, but the plan was scrapped after FGVH shareholders blasted the deal as too expensive.

The Eagle High stake was eventually bought by another unit of Felda last year at a 95% premium.

Najib is keen to fix FGVH, whose problems are hurting his image among key Malay voters. The settlers’ communities account for nearly a quarter of all parliamentary seats.

“By conservative estimates, Umno could lose at least five seats in Felda constituencies…A bigger Umno loss — up to 10 seats — is entirely probable,” said Gavin Browning, a Singapore-based analyst with political risk consultancy Eurasia Group, referring to Najib’s political party. — Reuters