Rajawali denies taking legal action against Felda

Economic affairs minister says Rajawali is contesting Felda’s decision to sell the stake


INDONESIA’S Rajawali Group has denied that its loss-making unit PT Eagle High Plantation Tbk (EHP) is taking legal action over the Federal Land Development Authority’s (Felda) decision to withdraw from the US$505 million (about RM2.3 billion) purchase of a 37% stake in the unit.

“Felda and Rajawali, or any subsidiary of Felda or Rajawali, are not and have never been engaged in any court proceeding,” Rajawali was quoted by Reuters as saying in a statement yesterday.

Last week, Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said Rajawali is contesting Felda’s decision to sell the stake, although it is allowed for Felda to sell the stake back at the original purchase price, plus a 6% annual interest charge to be borne by EHP via a “put option”.

The put option was detailed in the share sale agreement inked in 2015, thus the Malaysian government had issued a notice to EHP earlier this year to exercise the option.

However, the notice was met with resistance from Rajawali — the major shareholder in EHP, Azmin told reporters after the tabling of the Felda white paper in the Dewan Rakyat last week.

“When we were forced to purchase (EHP) then, it (the option to sell back) was part of the agreement. But I was informed that EHP is contesting the decision and is going for arbitration,” he said.

Under the put option, Rajawali, which is owned by Indonesian billionaire Tan Sri Peter Sondakh, must refund to Felda the US$505 million paid for the purchase of the shares, plus a 6% interest.

Subsequently, Felda lodged a police report on Monday last week, claiming that the deal had been forced by former Prime Minister Datuk Seri Mohd Najib Razak through a government loan.

Meanwhile, the white paper revealed that Felda had agreed to pay a 344% premium for the stake in EHP, as the purchase consideration of US$505.4 million or 584 rupiah (17 sen) per share was 344.12 rupiah higher than EHP’s share price of 135 rupiah per share on Dec 7, 2015.

Felda concluded the controversial deal to acquire the 37% non-controlling stake in debt-saddled EHP in April 2017, despite many red flags raised by market watchers and industry players.

The initial plan was for FGV Holdings Bhd to buy the stake for US$680 million, but it was dropped due to heavy public criticism. In the end, FIC Properties Sdn Bhd completed the deal.