by LYDIA NATHAN / pic by TMR FILE
FGV Holdings Bhd, via its unit FGV Integrated Farming Holdings Sdn Bhd (FGVIF), has entered into a share sales agreement with MSM Malaysia Holdings Bhd for the proposed acquisition of the entire stake in MSM Perlis Sdn Bhd for RM175 million.
In a joint statement yesterday, MSM Malaysia Holdings Bhd stated that the disposal of its wholly owned subsidiary, MSM Perlis, follows the discontinuation of its non-strategic operations as part of a rationalisation strategy to streamline profitability and develop operational capability.
MSM group CEO Syed Feizal Syed Mohammad noted that the disposal is a part of MSM’s blueprint in monetising its non-core assets to strengthen and improve its financial performance.
“An extraordinary income will be realised as part of the proposed disposal with an estimated gain of RM91.6 million. It is also to enhance our operational front, particularly on utilisation factor (UF) and yield improvement in MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor),” he said in the statement.
Besides the disposal, Syed Feizal said the accelerated planned rectification works at MSM Johor would also support MSM’s target to reach a minimum UF rate of 50% by the third quarter of the year.
MSM Perlis holds 11 parcels of agricultural and industrial land earmarked for the FGV Chuping Agro Valley (FCAV) development in Perlis by FGVIF, a new sector under the group.
The development consists of high-value integrated cash crop plantation activities such as MD2 pineapples, Harumanis mangoes and dairy farming.
MSM Johor recently completed its boiler rectification work and resumed its sugar production and packing.
The company said the temporary closure allowed planned rectification works and targeted higher operational reliability and stock availability.
FGV officer-in-charge and group divisional director of logistics and support businesses Azman Ahmad said he looks forward to developing and expanding the FCAV project to realise FGVIF’s strategic initiatives.
“This is in line with the government’s proposition to bolster the domestic economic sector and provide employment opportunities in efforts to reduce the impact of the pandemic,” he stated.
To date, more than 50 employees and field workers have been hired for the project, he added.
Since the cessation of sugar cane plantation, MSM Perlis has continued to manage the agricultural land with rubber, oil palm and mango plantations. Still, due to unsustainable performance, it ceased operations on June 30, 2019.
Meanwhile, its sugar refinery operations were discontinued a year later following MSM’s capacity rationalisation to consolidate the production in the new refinery, MSM Johor.
Furthermore, the unfavourable location of MSM Perlis from ports, its small capacity and high-cost facility have caused the operations to be uneconomical.
Both FGV and MSM boards have mandated these decisions to optimise the potential of the assets and strengthen the capital structure.
FGV and MSM shares ended flat at RM1.33 and RM1.31 yesterday, valuing the companies RM4.85 billion and RM920.9 million respectively.