Tabung Haji to buy FGV’s 50% interest in Trurich

The acquisition could cost the pilgrim fund as much as RM350m, pending minister’s endorsement


Lembaga Tabung Haji (TH) plans to take over FGV Holdings Bhd’s entire stake in the joint-venture (JV) plantation company, Trurich Resources Sdn Bhd, in a deal that could be worth several hundred million ringgit, said an industry source.

Trurich is a 50:50 JV company of both the pilgrim fund and FGV. It owns and manages 42,000ha of oil palm plantations in East and Central Kalimantan.

The source said the proposal for the Trurich stake purchase was submitted to the board prior to the 14th General Election, but the final decision would require the signature of the minister in charge of TH.

However, that decision was sent into limbo following Barisan Nasional’s historic defeat during the May 9 election.

“The final proposal would require the endorsement from the minister who is in charge of TH,” according to the source who has knowledge of the proposed deal, but is not allowed to speak to the media.

The 50% stake acquisition could cost the pilgrim fund as much as RM350 million. A final study and valuation are expected to be conducted by the fund, said the source. It is not known how TH will finance the purchase.

It is believed that the proposal had been submitted to the minister for his review and approval.FGV, which was formerly known as Felda Global Ventures Holdings Bhd, had voiced its intention to dispose of its non key assets.

Trurich is said to be facing operational issues, subsequently hurting its fresh fruit bunch production.

According to FGV’s 2017 annual report, Trurich’s liabilities at the end of the financial year 2017 stood at RM214.2 million. The company posted a net loss of RM97.5 million. The carrying value for FGV’s 50% stake was RM137.1 million.

FGV has been on a selling mission of its non core assets to boost profit, trim its debts and curb spiralling costs as part of its 2020 Strategic Plan.

Its unit, Felda Marketing Services Sdn Bhd, pocketed a total of RM224 million from the disposal of its 12.87% stake in AXA Affin General Insurance Bhd to Affin Holdings Bhd and the remaining stake to AXA Asia. FGV posted a net gain of RM26.85 million from the disposals.

Felda Palm Industries Sdn Bhd, another indirect subsidiary of FGV, is proposing to sell its 30% stake in Taiko Clay Chemicals Sdn Bhd for RM145 million.

It is not known how TH will integrate the loss-making Trurich into its stable of companies.

The pilgrim fund is a majority shareholder in TH Plantations Bhd.

TH is also facing a leadership chal lenge. It had announced the departure of its group MD and CEO Datuk Seri Johan Abdullah and deputy CEO Datuk Badlisyah Abdul Ghani effective June 30, 2018.

Their employment contracts had expired. The contracts of two board members, Tan Sri Badruddin Amiruldin and Tan Sri Mohamad Aziz, also expired on the same day.

The pilgrim fund also announced in May the resignations of its chairman Datuk Seri Abdul Azeez Abdul Rahim and board members Tan Sri Mohamed Apandi Ali and Datuk Rosni Sohar. Abdul Azeez is linked to Umno. The new government has yet to announce who will lead the fund. But a former banker has been rumoured as one of the possible candidates to lead TH.