FGV to divest stake in Trurich


FGV Holdings Bhd is expected to divest its entire stake in Trurich Resources Sdn Bhd, the group’s joint-venture company with pilgrim fund Lembaga Tabung Haji, for more than RM1 billion by September this year.

Group CEO Datuk Haris Fadzilah Hassan said the plantation group is in talks with seven parties that have expressed interest in the loss-making Indonesian company. It was reported that Trurich controls 42,000ha of oil palm estates in Kalimantan, Indonesia.

“We are in talks with all of the interested buyers. As you know, Trurich actually comprises two estates — one is Kalteng PT and the other is Kaltara PT. Three of the buyers have plans to buy both of the estates, while the other four are looking to buy only one estate, so we are still in negotiations.

“Preferably, we would like to sell it as a whole. I hope to complete this before the end of the year, probably in September if everything goes through,” Haris Fadzilah said at the company’s quarterly results briefing in Kuala Lumpur yesterday.

Last month, Bloomberg reported that FGV was in the middle of gauging offers of up to US$1 billion (RM4.2 billion) for Trurich.

Haris Fadzilah corrected the figure and said the value is in the local currency.

Besides Trurich, FGV has targeted to achieve some RM350 million in proceeds from the divestment of non-core and non-performing assets as part of its three-year transformation programme.

The group is finalising divestments of several non-core and non-performing assets amounting to RM150 million, which include Felda Engineering Services Sdn Bhd and Felda Properties Sdn Bhd.

Haris Fadzilah said the two deals would be formalised soon, so that the returns could be seen in the company’s second or third-quarter financial results this year.

Meanwhile, Haris Fadzilah said FGV has not engaged in formal discussions with the Federal Land Development Authority (Felda), its biggest shareholder, on a land lease agreement (LLA).

It was previously reported that FGV was keen to revise the terms of the LLA with Felda, especially on the fixed lease payment of over 99 years. FGV said the matter has been raised repeatedly over the last three years, causing much uncertainty and concern to its shareholders.

Under the LLA’s current terms, FGV must pay a fixed lease payment of about RM250 million per year for 99 years, beginning from 2012. FGV was listed in 2012. The RM250 million is paid irrespective of prevailing crude palm oil (CPO) prices.

The LLA was negotiated in 2012 when the average CPO price was RM2,843 per tonne. As at May 28, 2019, the average CPO price stood at RM1,951 per tonne.

Additionally, FGV has committed to pay Felda a 15% share of estate operating profits. Since 2012, it has paid a total of RM2.23 billion.