FGV’s disposal of Trurich to be completed early next year

Discussions are ongoing with the highest bidder, says group CEO


THE negotiation on the disposal of Trurich Sdn Bhd, a 50:50 joint-venture company between FGV Holdings Bhd and Lembaga Tabung Haji, is expected to conclude in the first quarter (1Q) of 2020.

FGV Holdings Bhd group CEO Datuk Haris Fadzilah Hassan (picture) said discussions are ongoing with the highest bidder.

“The bidding process has been completed and they have tabled all the bids. The negotiation is currently being conducted with the highest bidder and at the board level, we have expressed that we want to proceed with this.

“That is why we take the impairment for the balance, which we think cannot be claimed as a result of this disposal. The impairment indicates that the process is coming to an end,” he told reporters at the group’s 3Q financial result presentation in Kuala Lumpur yesterday.

Commenting on Trurich’s plantation valuation, Haris Fadzilah said there was a disparity in the plantation’s valuation when it was first announced in May and the average current offers by interested parties.

“Since then, the condition of the plantation has deteriorated and there are cases where we cannot enter the estates and people have blocked access to some of the areas. So, when the bid comes in, there is a gap between what the valuation is and what the interested parties are willing to pay for.

“Trurich has also made some local loans. We are being very prudent in terms of writing off the advances where we feel that even after the disposal, will not be able to cover,” he said.

Trurich currently owns and manages two oil palm fields covering 42,000ha in the north and central Kalimantan, Indonesia.

In its 3Q ended September 2019, FGV recorded an impairment of RM125 million attributable to the shareholder’s advance for Trurich, which had weighed on its quarterly performance.

In May, Haris Fadzilah said the planter was in negotiations with seven interested buyers for the disposal of the Indonesian unit over a valuation of more than RM1 billion.

Meanwhile, he said the planter is in talks with a strategic partner from China to sell 70% of the excess sugar production by MSM Malaysia Holdings Bhd’s new refinery in Johor.

“There is an active discussion at MSM Johor because that is where the additional one million tonne capacity is coming from, through the new refinery that has come on board.

“The strategic partner we are looking at is having the off-take capability and demand in its domestic market. We don’t want to supply the local market. The total capacity of MSM today is at 2.25 million tonnes, while the demand in Malaysia is 1.6 million tonnes,” he said.

He added that the Chinese company is expected to buy 700,000 tonnes of MSM’s one million-tonne excess production, while the remaining 300,000 tonnes will be distributed for export.

Haris Fadzilah said at present, there are about five countries with a liberalised sugar market, namely New Zealand, Australia, United Arab Emirates, Hong Kong and Singapore.

“We need to have an avenue to export our sugar. In the world today, there are only five countries that are open on their sugar sector while other countries have regulations regarding their sugar sector.

“We are talking to companies who have a gap between their domestic capability and demand. Currently, China and Indonesia are the two countries that are able to receive our production,” he said.


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