FGV to file 2 more legal suits, losses widen to RM849m

By ALIFAH ZAINUDDIN / Pic By ISMAIL CHE RUS

FGV Holdings Bhd plans more legal actions against the company’s former board members as the share price of the planter plummeted to a new record low after posting a disastrous quarterly result.

Shares of the government-linked planter became a penny stock after it continued a seven-day drop streak to close yesterday at 91.5 sen, a fresh record low for the company which was listed in 2012 at an initial public offering price of RM4.55.

Investors further distanced themselves from FGV after the planter reported RM849.26 million in net loss for third quarter ended Sept 30, 2018 (3Q18), largely due to the RM513 million provision related to the contentious Asian Plantations Ltd (APL) acquisition.

FGV recently filed civil proceedings against 14 former board members and management staff of the company over the deal.

Chairman and interim CEO Datuk Wira Azhar Abdul Hamid (picture) said the plantation group has filed the biggest case involving APL at the Kuala Lumpur High Court last week, and two more filings will be made against the company’s former directors before year-end.

“The (internal) investigations are almost done. We’ve done the big one (APL) and we’re taking that through the legal system now. On the other (cases), you should be hearing the same on one or two more before the year ends,” he said at the company 3Q financial briefing in Kuala Lumpur yesterday.

Azhar did not reveal the cases, but the upcoming legal suits are related to investigations carried by the planter since January this year.

Among the acquisitions probed by the new management FGV are Cambridge Nanosystems Ltd and the purchase of high-end luxury condominiums at The Troika.

Forensic investigators had also examined open credit lines, poor purchasing trading practices and poor palm oil sales, direct awards of procurement contracts and the shortage of workers from mid-2016 to mid-2018.

“The one or two would be coming out from that list,” he said without going into details.

Azhar did not reveal if the new legal proceedings would implicate those already named in the APL-related suit.

But the company’s immediate concern is the poor financial results. The world’s largest crude palm oil (CPO) producer’s net loss widened due to the RM788 million impairment provisions for the quarter.

Revenue also declined 22.8% to RM3.2 billion due to the poor CPO price. The average CPO price realised was RM2,224 per metric tonne (MT) for the period under review compared to RM2,665 per MT in the previous corresponding quarter.

Besides the APL’s RM513 million provision, RM53 million was provided for FGV Cambridge Nanosystems takeover, two units of Troika condominiums (RM1.22 million) and FGV Green Energy Sdn Bhd (RM102 million).

Azhar, however, defended the move to make the huge provisions for all these deals.

“The easiest thing was to put all these (impairments) out earlier. But we wanted to make sure, so we carried out a lot of investigative work.

“Now, we are relatively sure of our numbers. That is why we have chosen this quarter to actually put this through. The main rationale for that is because the biggest one, which is APL, has been finalised and confirmed,” he said.

Despite falling into the penny stock territory, Azhar dismissed plans to take the planter private.

“At the moment, no. As I’ve said, we have gone through the difficult part of transformation, ie putting through the big impairments that we need to put through.

“I believe, moving forward, the future is going to be brighter for FGV and personally, I strongly believe it will not stay below RM1.

“As we move, people will start seeing the value in what we are doing and hopefully, the confidence level will increase,” he said.

Azhar also maintained that FGV assets should not be transferred to the Federal Land Development Agency (Felda) despite speculation the suggestion could be part of the government’s white paper on ailing agency.

“I’d like to hang on to the fact that in every option that is considered in the white paper, there is a process of doing things.

“If you look just at the Land Lease Agreement (LLA), let’s say as an extreme example, if we see Felda taking back the estates under the LLA, there is a compensation formula.

“So really, if you look at the reality of the situation, the first question to ask is, can Felda actually afford to do something like that? Or is it better for us to leave things status quo for the time being?” he said.